Speaker 1: Welcome to How the Money. I'm Joel Matt, and today
Speaker 1: we're discussing buying a car the right way. That's right, buddy, Transportation,
Speaker 1: that's one of those big expenses. We spend a lot
Speaker 1: of money on transportation every single year, but every few years,
Speaker 1: hopefully not too much. More often than that, folks are
Speaker 1: oftentimes faced with the very large purchase of a vehicle.
Speaker 1: And we're gonna dedicate an entire episode towards buying a
Speaker 1: car the right way. Yeah, and well, I would say this,
Speaker 1: if you're buying a car every year, you're doing it wrong, okay,
Speaker 1: or definitely you should be leasing if you're doing that,
Speaker 1: And we don't really recommend leasing, but if we need
Speaker 1: a new car, everyone do that either. At least that's
Speaker 1: probably the only situation which that makes sense. We're already
Speaker 1: off to a bad start, and you can do it
Speaker 1: the wrong way. There are ways to do it the
Speaker 1: wrong way, and leasing is kind of sort of the
Speaker 1: wrong way too. Well, yeah, we'll get into all our
Speaker 1: thoughts on that in this episode. But Matt, before we
Speaker 1: get to that, I wanted to mention that there was
Speaker 1: a study that came out from U c l A.
Speaker 1: And this they basically said that there isn't a lot
Speaker 1: of learning loss if you're watching videos or listening to
Speaker 1: content at two X speed. And I thought I was
Speaker 1: gonna say that again for all of our listeners listening
Speaker 1: at two point five. Slow it down, at slow it down,
Speaker 1: and so you can understand me. So I just wanted
Speaker 1: everybody that is listening to the two X is gonna
Speaker 1: hear that, and it's gonna mess with their heads? Did
Speaker 1: I just hear? So? I'm personally the kind of person
Speaker 1: who there's a lot of podcasts I enjoy listening to,
Speaker 1: and I don't quite have enough time to fit them
Speaker 1: all in. And if I want to fit most of
Speaker 1: them in, then I do have to listen at a
Speaker 1: faster speed. And so, depending on the podcast I do listen,
Speaker 1: it somewhere between like one point seven and two X speed.
Speaker 1: And it's good to know that. Like I will say,
Speaker 1: I don't think I'm getting quite as much. I don't
Speaker 1: think I'm retaining quite as which as I would if
Speaker 1: I was to listen at one X. But also it's
Speaker 1: almost harder for me to listen to something at the
Speaker 1: normal speed these days. Shut up. I almost needed to
Speaker 1: be like at least one point two or I'm like,
Speaker 1: what's wrong with these people? It sounds like they're just
Speaker 1: talking way too exactly. Well, okay, so I want to
Speaker 1: call bs on the study because I, like you, I
Speaker 1: listened to a lot of podcasts, we listen to a
Speaker 1: lot of audio books, and I want this to be true,
Speaker 1: right Like, I want to read this study, this report
Speaker 1: and say, there you go, see like you can listen
Speaker 1: to something at two x speed and retain just as
Speaker 1: much information. But dude, come on, this is confirmation by us,
Speaker 1: right like, this is something we want to be true.
Speaker 1: And so you come across the story, it looks like
Speaker 1: it's well researched out there in U. C. L A.
Speaker 1: But if you search, like, there's a lot of other
Speaker 1: studies to that point to the fact that, oh, in fact,
Speaker 1: it does reduce your ability to retain information. But like
Speaker 1: you said, I am okay with that. I think as
Speaker 1: long as folks are able to make the decision knowing
Speaker 1: the facts, and so if I know that I'm only
Speaker 1: going to be able to retain eighty or nine percent
Speaker 1: of the information, but if that means I'm able to
Speaker 1: listen to twice as much stuff because I'm listening to
Speaker 1: it at two x speed, then that's that's a trade off, right,
Speaker 1: Like in all throughout life, we make trade offs, and
Speaker 1: this is one of those. And so if you are
Speaker 1: a high consumer of audio content, yeah, this is good
Speaker 1: news as long as you are aware of the decisions
Speaker 1: you're making. Yeah. So I think maybe the ideal range
Speaker 1: for people is somewhere between like one point five and
Speaker 1: one point seven if you can handle it, if you
Speaker 1: want to listen at that speed, and the first time
Speaker 1: you hear it, you're like, who does this? It's it
Speaker 1: sounds almost garbled. But once once you kind of get
Speaker 1: used to it, Yeah, it's yeah, it's like building a muscle,
Speaker 1: like your brain gets better at it. And I will
Speaker 1: say sometimes I'll flip something on and by default it's
Speaker 1: on at like one point five and k it's like
Speaker 1: whoa whoaa, Like this sounds like it's on warp speed.
Speaker 1: But over the years she has slowly kind of ramped
Speaker 1: up her ability to listen to something faster as well.
Speaker 1: And she's she said specifically that if I listened to
Speaker 1: it first at kind of one point two, she can
Speaker 1: then slowly ramp up because you get used to the
Speaker 1: way somebody speaks to the way they talk and the
Speaker 1: other thing too. Man, it depends on what you're listening
Speaker 1: two as well, right, Because if I'm listening to an
Speaker 1: audio book, like a narrative a story, to even two
Speaker 1: point five is not difficult for me because it it
Speaker 1: oftentimes depends on who's narrating, right. But if it's a
Speaker 1: podcast and they're really diving into like very technical things
Speaker 1: and they're talking about the economy and the jobs report
Speaker 1: and just different things like that, uh, slow that, Yeah,
Speaker 1: you slow down because there's a lot of technical information
Speaker 1: that is more difficult to you know, when you're jumping
Speaker 1: from one bit of information to the next, to the
Speaker 1: next to the next, and none of them are really linked.
Speaker 1: It's difficult, I think, to to follow along on a
Speaker 1: really rapid clip. Yeah, alright, well, just blessings on you.
Speaker 1: If you want to listen to How the Money a
Speaker 1: little bit faster than one x, that's totally cool, And
Speaker 1: a lot of the podcasting apps have made it so
Speaker 1: much easier to to actually do that. I know, Google Podcasts,
Speaker 1: it's like you can you can go one point six,
Speaker 1: one point seven, one point eighty. It literally only used
Speaker 1: to be like one x one point five x two
Speaker 1: x yeah, but now yeah, a lot of and have
Speaker 1: all of those fine adjustments that you can go in
Speaker 1: there and kind of like those beer ratings on untapped,
Speaker 1: you know, and it used to be like half a point,
Speaker 1: and now you can. I think you can dial it
Speaker 1: in pretty specifically. Although I don't really post my beers
Speaker 1: there anymore. So I tried to, but the last time
Speaker 1: I was on there, I thought it was still doing
Speaker 1: just quarter quarter of a point. I thought you can
Speaker 1: dial it in more than that. Maybe maybe I'm wrong.
Speaker 1: I really don't get on there bar Okay, So all right,
Speaker 1: but let's mention the beer that we're having on this episode.
Speaker 1: This one is called Pothole City. It's a rocky road stout.
Speaker 1: It's by Pipeworks Brewing. And we'll let you know our
Speaker 1: thoughts on this one at the end of the episode.
Speaker 1: But Matt, onto the topic in hand. Let's talk about
Speaker 1: buying a car the right way. Yeah, yeah, exactly. Any
Speaker 1: of your transportation needs, uh, And some of the most
Speaker 1: important financial decisions that we make are done infrequently. And
Speaker 1: because of that, Matt, we we feel like a little
Speaker 1: rusty every time we perform that task. Even just doing
Speaker 1: your taxes, You're like, how do I, how do I
Speaker 1: do this again? It's coming to be that time. Fortunately,
Speaker 1: their software to help you out with that, or or
Speaker 1: if you take someone that you pay, or if you
Speaker 1: take really good notes. That's what I do is I
Speaker 1: kind of keep this document that I refer back to
Speaker 1: and then I just have everything listed out step by step.
Speaker 1: There you go. Makes it super quick, see quick and easy?
Speaker 1: But yeah, so the average person buys a car one
Speaker 1: in every six years, and so that's plenty of time
Speaker 1: for most of us to completely forget how the process
Speaker 1: works by the next time we need to buy a car.
Speaker 1: It makes me think of traveling abroad these days. It's
Speaker 1: been a while for pretty much all of us. I
Speaker 1: know some folks have still been been traveling abroad, but
Speaker 1: there's the truth that there are a lot of countries
Speaker 1: that won't even allow us to visit their shores right now,
Speaker 1: and so there's a lot more questions we have when
Speaker 1: we're booking that trip. Do I need trip insurance? Is
Speaker 1: the country I want to go to even accepting visitors
Speaker 1: from the US. What sort of vaccination documentation do I need?
Speaker 1: How early do I even need to get to the airport. Again,
Speaker 1: those are the kind of questions the funnel and be
Speaker 1: like how long does it take too to go through
Speaker 1: security and stuff like that, Like I've forgotten at this point.
Speaker 1: So we all need this refresher and so that's kind
Speaker 1: of what this episode is. It's a refresher on buying
Speaker 1: a car the right way, And obviously part of that
Speaker 1: has to do with kind of what's currently happening in
Speaker 1: the car space. We've seen a lot of change, that's right. Yeah,
Speaker 1: In a similar way, the car market has experienced a
Speaker 1: lot of turmoil. So if you bought a car six
Speaker 1: years ago, the way that you go about buying a
Speaker 1: car has changed significantly. We've seen a huge shift, especially
Speaker 1: over the past eighteen months, in pricing and just different
Speaker 1: purchasing dynamics. A global pandemic led to a chip shortage,
Speaker 1: and then that chip shortage led to supply chain issues.
Speaker 1: All of the problems created a tighter car market, resulting
Speaker 1: in fewer cars on the lot and much much higher prices.
Speaker 1: Edmonds is even predicting that the average price of a
Speaker 1: used car is going to surpass thirty thousand dollars this year.
Speaker 1: And that's right. I actually said used cars the average
Speaker 1: used cars and o K, that's a lot of money
Speaker 1: for a second and uh form of transportation. And because
Speaker 1: so much is at stake here, it's crucial that you
Speaker 1: take the proper steps to make sure that you're going
Speaker 1: about things in the right way. Yeah, you don't want
Speaker 1: to buy a thirty thou do lemon, that's for sure.
Speaker 1: And so let's talk about kind of more of what's
Speaker 1: changed in recent years and how those shifts impact us
Speaker 1: as consumers. If we're in the car market, Matt, you
Speaker 1: mentioned the average price of a used car is going
Speaker 1: to hit thirty dollars, which is true. I see that
Speaker 1: happening this year. But the average price of a new
Speaker 1: car costs for dollars now, which is a heck of
Speaker 1: a lot more right. And on top of that, even
Speaker 1: fancier new cars are getting launched. For instance, like the
Speaker 1: new Jeep Grand wagoneer. It starts the starting price is
Speaker 1: almost ninety dollars, So you can get that car or
Speaker 1: that ride up into six figures. And I'm sure it's nice.
Speaker 1: It's got the perfectly quaffit interior and the fancy screen
Speaker 1: or something like that. Yeah, everything you could look. I'm
Speaker 1: sure it's lovely, But there's just so much more we
Speaker 1: have to think through as car prices expand and as
Speaker 1: fancier cars are are put out there on the market,
Speaker 1: and there's just so much at stake, Uh, so much
Speaker 1: of your money at stake when with that next car purchase.
Speaker 1: And here's what you need to think about. Two. That
Speaker 1: ninety thousand could easily become a million dollars in thirty
Speaker 1: years if you left it to grow in the stock market.
Speaker 1: So there is this reality that where you allocate your
Speaker 1: money makes a big difference in your ability to build
Speaker 1: more wealth. And if more of your money is going
Speaker 1: towards the four wheels that riding around in, it's gonna
Speaker 1: detract in a big way from your ability to build
Speaker 1: wealth the way you want. It's right, And why's it
Speaker 1: gonna be four wheels? Man? Why can it be one
Speaker 1: of those three wheeled vehicles you see driving down the
Speaker 1: ones that kind of batmobiles. Yeah, yeah, they've got like
Speaker 1: two wheels up front for steering, but there's only like
Speaker 1: one like bigger wheel in the back. I still don't
Speaker 1: understand that, Like white people get those, but they look
Speaker 1: kind of interesting. There's a couple of those that we
Speaker 1: see driving around the neighborhood. But you know, folks already
Speaker 1: know this as well. But one of the other things
Speaker 1: that we've seen change over the years is that folks
Speaker 1: have gotten way more comfortable buying a used car site
Speaker 1: unseen based on just the different pictures of the car
Speaker 1: on the internet descriptions. I'm specifically thinking about Carbona, but
Speaker 1: CarMax as well, that they both have led that charge
Speaker 1: and are the two big names in the used car
Speaker 1: buying market these days. GM they just launched car Bravo
Speaker 1: to be another competitor in the space. Uh and and
Speaker 1: they're not just selling GM vehicles as well, they're selling
Speaker 1: all types of vehicles. So generally speaking, we do like
Speaker 1: these sites. They've made it easier to shop on line
Speaker 1: for a vehicle, and most of us are looking for
Speaker 1: some more convenience in our lives. They'll often deliver it
Speaker 1: to you, right Caravanna they've got that seven day return policy,
Speaker 1: and CarMax they've got that thirty day return policy. This
Speaker 1: gives you plenty of time to take it to the
Speaker 1: mechanic and know if you'll like it. But this is
Speaker 1: another reason we're talking about this because the way just
Speaker 1: the actual mechanics of what it looks like to purchase
Speaker 1: a new vehicle has changed significantly. Yeah, five years ago,
Speaker 1: buying a car on the internet was not really a
Speaker 1: thing or we're taking a risk. Yeah, exactly. It was
Speaker 1: a new thing. Like I mean that we purchased our
Speaker 1: Honda Odyssey on CarMax like about I guess it's like
Speaker 1: four or five years ago. Yeah, that was kind of
Speaker 1: even towards the beginning. Really it was kind of like
Speaker 1: this novel idea and you and I were talking, We're like, oh,
Speaker 1: do we get to see it come down like the
Speaker 1: car vending machine, like for picturing it like two little kids,
Speaker 1: like we're gonna watch a gunball like go down the spiral.
Speaker 1: That was kind of tradition. The fame was that vending machine.
Speaker 1: And now they have one literally like down the Downtown
Speaker 1: Connector in Atlanta, and now they've built ones in other
Speaker 1: locations too as they've expanded nationwide. Always look at it. It
Speaker 1: It is cool. Yeah, but it is this new way
Speaker 1: of buying a car, and I guess not so new anymore,
Speaker 1: but but it is one of those things where it's
Speaker 1: important to note that buying online is is really helpful.
Speaker 1: I think in a lot of ways, or at least
Speaker 1: searching online some of those sites has made the car
Speaker 1: buying used car buying process a little more transparent. But
Speaker 1: in addition to those newer companies that have gotten pretty
Speaker 1: dominant in recent years, some of the older companies like
Speaker 1: Craigslist and auto trader, even the just the classic for
Speaker 1: sales sign in the car window, those are still legitimate
Speaker 1: ways to buy the car. All those options are still around.
Speaker 1: And the great thing is that, unlike those other sites
Speaker 1: we mentioned, the price isn't fixed, whereas like carbona, you're
Speaker 1: not gonna be able to negotiate and be like, can
Speaker 1: I get bucks off that price? And they're like, nope,
Speaker 1: the prices the price, Well, you can stay, that's right.
Speaker 1: When it's a private sale, you can haggle. And that's
Speaker 1: a beautiful thing that that might sound awful to you, though,
Speaker 1: I think that some people they're like, haggling, I don't
Speaker 1: want to interact with another human being exactly. Let me
Speaker 1: do what I want to do, and some people don't
Speaker 1: take joy in that. I personally do take joy in that.
Speaker 1: I like to kind of negotiate the price, but some
Speaker 1: people find that to be appalling and I get it,
Speaker 1: but yeah, you want to take extra precautions to say
Speaker 1: safe if you're meeting private car sellers all over your town.
Speaker 1: We would say meeting in the parking lot of a
Speaker 1: police station is certainly one way to help keep yourself
Speaker 1: safer when you're buying a used car from an individual.
Speaker 1: But just remember, even with the advent of these online
Speaker 1: buying services there, you can still go the old school
Speaker 1: route and sometimes that is actually going to save you
Speaker 1: the most money. In large part mat because some of
Speaker 1: those online car buying sites they don't really have many
Speaker 1: older models up for sale, so the starting price point
Speaker 1: is usually fourteen fifteen dollars, and if you're looking for
Speaker 1: a car, a great used car in the five to
Speaker 1: fifteen thousand dollar range, you're not going to find that.
Speaker 1: There's yeah, it cannot be difficult, and honestly, that's what
Speaker 1: we found when we purchased our vans. We purchased about
Speaker 1: about five years ago, and at the time it was
Speaker 1: about five years old, and that was the oldest and
Speaker 1: honestly that we could find. And for us then we
Speaker 1: were like, okay, this is used, but we were still
Speaker 1: paying a lot of money for a vehicle. That was
Speaker 1: something that we had to grapple with and if we
Speaker 1: wanted to save more, we would have had to look
Speaker 1: at a more traditional method of buying. That's right for
Speaker 1: a lot of for a lot of how the money
Speaker 1: listeners who who do want to save a lot, they
Speaker 1: want to drive something that is older and cheaper. Online
Speaker 1: shopping is is probably not going to get the job done.
Speaker 1: You're gonna have to look at some of those more
Speaker 1: old school methods. You're gonna have to look at something
Speaker 1: a little bit older than five years old. Uh. One
Speaker 1: of the other changes we've seen, too, man like in
Speaker 1: the past several years, is that we've seen the number
Speaker 1: of electric vehicles on the road skyrocket. However, that being said,
Speaker 1: range anxiety like that is still an issue when it
Speaker 1: comes to electric vehicle adoption, but massive strides have already
Speaker 1: been made since the first evs debuted. For instance, I
Speaker 1: saw the Mercedes. They just revealed this concept car that
Speaker 1: they claim is going to have a range of six
Speaker 1: d and twenty miles, which is awesome. That's impressive. Yeah,
Speaker 1: it's comparable to what a typical busttion engine powered vehicle
Speaker 1: would be able to get on one fill up. Yeah,
Speaker 1: but you know, like once automakers are able to hit
Speaker 1: the like the five to seven hundred mile range on
Speaker 1: a single charge, mass adoption is likely going to occur.
Speaker 1: I truly believe that's what's kept folks from jumping on
Speaker 1: evs even more because you can't have this benefit, right,
Speaker 1: So with a typical gasoline powered car, you can't have
Speaker 1: a car that where you could drive six miles if
Speaker 1: you wanted to without stopping and then take it away.
Speaker 1: I think for most people that's what caused the anxiety, Like,
Speaker 1: that's what caused the problems. However, like if in some
Speaker 1: bizarro world, if gasoline powered cars only got like two
Speaker 1: hundred or three hundred miles per fill up, there would
Speaker 1: be no hesitation. I think when it came to folks
Speaker 1: switching over to evs, because that's what they would be
Speaker 1: used to, I would say, I think you're a little
Speaker 1: bit wrong on this because I think the average gas
Speaker 1: car when you want my miles, man, well, when you
Speaker 1: do the miles, you're not getting five miles before you
Speaker 1: fill up. You're getting maybe and so it's important to
Speaker 1: to to realize that that's probably But here's the thing.
Speaker 1: So thirty miles per gallon on a twenty gall take.
Speaker 1: Not not on the odyssey, but dude, a lot of
Speaker 1: people are on I mean, and not not even to mention.
Speaker 1: I'm just saying, like, I think, maybe, let's say you're
Speaker 1: getting three fifty. But here's the thing. When you fill
Speaker 1: up at the gas station, it's much quicker than it
Speaker 1: is to charge, and that's part of the slow nure
Speaker 1: in adoption is because the charging still takes so long.
Speaker 1: And so that's why the greater mileage I think is
Speaker 1: needed for in order for people to adopt evis in
Speaker 1: higher numbers totally. But I think even just like the idea,
Speaker 1: like the fact that this was something that was available
Speaker 1: to people, even if they weren't taking advantage of it,
Speaker 1: or even if maybe on a in a perfect world,
Speaker 1: the mileage sheet says that you should be able to
Speaker 1: do this to then take that away. People don't like
Speaker 1: things being taken away from them, right, and so from
Speaker 1: a psychological standpoint, I think that that has been a
Speaker 1: major hurdle for folks as well. But there's good news, right,
Speaker 1: because the median range of a new electric vehicle surpassed
Speaker 1: two fifty miles last year, and that's plenty of range
Speaker 1: for the way that most folks drive. And so while
Speaker 1: evs are typically more expensive upfront, some of them still
Speaker 1: come with a federal tax credit. And plus they're gonna
Speaker 1: save you a holide chunk on gas and maintenance over time.
Speaker 1: And then on top of that, if a two to
Speaker 1: three year old EV makes sense for your family, you
Speaker 1: can save even more by letting someone else take that
Speaker 1: depreciation hit. That's right, because those first three years of
Speaker 1: ownership where you see the biggest depreciation hit come. And
Speaker 1: so yeah, if you're often for that slightly older electric vehicle,
Speaker 1: that might be the sweet spot for a lot of people,
Speaker 1: as also as the range works for you. So do
Speaker 1: you when we were talking about electric vehicles, do you
Speaker 1: say e V typically? Like? So the reason I the
Speaker 1: reason I asked this is because so our oldest daughter,
Speaker 1: her name is Evy, and eight years ago when we
Speaker 1: named her evs as electric vehicles, as a popular term
Speaker 1: like that wasn't on our radar at all. I mean,
Speaker 1: electric vehicles existed, but I think you just called them, Oh,
Speaker 1: that's an electric car or something like that. But we
Speaker 1: often refer to electric cars now as e v's, and
Speaker 1: I feel like we name it's. It's like ten years ago,
Speaker 1: somebody named their daughter Siri or Alexa. Like, it's probably
Speaker 1: pretty annoying right now. Yeah, but yeah, obviously I think
Speaker 1: people are going to be nearly as ubiquitous in our language. Well,
Speaker 1: and at this point I'll share it, like, I I'm
Speaker 1: sorry for everybody whose devices just activated. I just realized
Speaker 1: you're not supposed to actually say those names podcasts more,
Speaker 1: aren't you? No, I don't think so, sorry everybody. Well,
Speaker 1: so I'll share that I I had an Evy for
Speaker 1: a long time. I bought a Nissan Leaf. In part
Speaker 1: of it was because of the tech tax credit that
Speaker 1: you mentioned, Matt, which helped plunge the price down in
Speaker 1: a big way. And you know, there weren't a lot
Speaker 1: of other folks at that period of time, almost ten
Speaker 1: years ago, willing to take that plunge into the electric
Speaker 1: vehicle market. And you're an early adopter. Yeah, well I
Speaker 1: get it. There was a big, big discrepancy in what
Speaker 1: you got then versus what you can get now there
Speaker 1: and so yeah, the range on my Leaf I think
Speaker 1: was something like eighty miles to the charge. That was
Speaker 1: on a warm day. That's right. Well, the condition certainly affects,
Speaker 1: like how many miles you're gonna get out of it, right,
Speaker 1: And so it worked great for us as a two
Speaker 1: car family living in town where my my job was,
Speaker 1: you know, five or six miles away from the house.
Speaker 1: But I get that it wasn't it didn't make sense
Speaker 1: for a lot of folks. But like you said, that's
Speaker 1: changed quite a bit. If the the average range on
Speaker 1: a new e V is two d and fifty miles
Speaker 1: as of last year, that's a big jump for a
Speaker 1: lot of folks, and it pushes that into the range
Speaker 1: of making sense. So I would say, yeah, with the
Speaker 1: added variety of electric vehicles that are on the market,
Speaker 1: the far superior battery range, a lot more options, there's
Speaker 1: just so many more, yeah, for people to consider. I
Speaker 1: think it makes sense and it's something that people should
Speaker 1: look into. Uh. I'll keep an eye out for the
Speaker 1: first electric van that that rolls out. I'm looking, Well,
Speaker 1: that's supposed to be the Voltswangen van. Yeah. You were
Speaker 1: talking about the the I D bus or whatever for
Speaker 1: forever now, but we're you know, we were recently talking
Speaker 1: about how Rivian they need to put that they need
Speaker 1: to create a van, a minivan on their you know,
Speaker 1: RT whatever, their rivian truck is called Uh, they need
Speaker 1: to build a sweet looking van on that truck platform,
Speaker 1: and that will be the first time that I am
Speaker 1: actually tempted to consider a new vehicle, but I'm probably
Speaker 1: still not gonna do it even Yeah. Well, and well
Speaker 1: the other thing too, when you look at the numbers,
Speaker 1: and when we're talking about how much we're spending on
Speaker 1: a car, it's it's easy to look at just a
Speaker 1: sticker price, but really we need to look at the
Speaker 1: total cost of ownership over a period of time. And
Speaker 1: the one, the one additional thing that electric vehicles have
Speaker 1: going for them is, over you know, ten fifteen years,
Speaker 1: a much lower cost of ownership because there's less to
Speaker 1: go wrong with those vehicles and you're not paying for
Speaker 1: yes Phillips every week, right, So it's going to make
Speaker 1: a big difference over time if you decide to go electric.
Speaker 1: But enough about electric vehicles. We have more to get to.
Speaker 1: There's a whole lot of stuff you need to think
Speaker 1: about before you even start browsing the internet for that
Speaker 1: new car, and we'll get to our thoughts on that
Speaker 1: right after this break. We're back and we're talking about
Speaker 1: buying cars the right way and u. Yeah, you know,
Speaker 1: like you mentioned, we've got a lot more to talk
Speaker 1: about on the how to front here, but it's also
Speaker 1: important to explain maybe a bit more about how we
Speaker 1: think about cars because we think of them mainly as
Speaker 1: point A to point be transportation vehicles. That's true. So
Speaker 1: you know, people who think of their cars as their baby,
Speaker 1: they're gonna come to a different conclusion about how much
Speaker 1: they should pay for a car. You know, the people
Speaker 1: who are putting the fake hilashes on the headlights, we
Speaker 1: don't do that. Yeah, we don't do that, or the
Speaker 1: antlers at Christmas. Uh, that's a different breed of folks
Speaker 1: as well. But the pure and simple fact is that
Speaker 1: cars are liabilities, they're not assets. And so keep this
Speaker 1: in mind that buying a car that's seven to ten
Speaker 1: years old, it won't just save you quite a bit
Speaker 1: of money. We think that, uh, it actually comes with
Speaker 1: some legitimate psychological benefits as well, because man, sometimes we
Speaker 1: think that a big purchase like a new car, we
Speaker 1: think it's gonna make us happy. But we're here to
Speaker 1: tell you that it won't. No one is judging you
Speaker 1: for the car that you drive, uh, or actually if
Speaker 1: they are like that's their own problem. Don't let those
Speaker 1: social pressures cause you to overspend on something that you
Speaker 1: really actually don't care all that much about. Being comfortable
Speaker 1: driving an older car is a good thing. The ability
Speaker 1: for you to take that money that you're saving and
Speaker 1: put that towards retirement, that is a good thing. It's
Speaker 1: not necessarily that we want you to deny yourself. However,
Speaker 1: we do want you to focus on other goals that
Speaker 1: might be a bit more important. Yeah, man, I think
Speaker 1: you're right. And I think sometimes those societal pressures can
Speaker 1: cause us to make decisions with our money that don't
Speaker 1: align with our values, or that don't align with our
Speaker 1: desires for what our life is gonna look like. It's
Speaker 1: just kind of like everybody else is around me is
Speaker 1: doing this, and so maybe I should do it too.
Speaker 1: And I think when we when we reconsider what a
Speaker 1: vehicle looks like our means to us in our lives,
Speaker 1: it can cause us actually to dig a little deeper
Speaker 1: and address what it is that's truly going to make
Speaker 1: us happy. Because it's not the car that's gonna make
Speaker 1: us happy. It's stuff. The new car sent doesn't last
Speaker 1: very long, you know, and so why not cut straight
Speaker 1: to the chase and figure out that it's the things
Speaker 1: like close relationships, meaningful work that actually, you know, make
Speaker 1: us happy instead of taking a forty seven thousand dollar
Speaker 1: detour car price yeah further down the road, or a
Speaker 1: thirty thousand dollar de tour by spending the average amount
Speaker 1: on a used car. Plus you and I, we kind
Speaker 1: of view crossing that two hundred thousand mile mark as
Speaker 1: a badge of honor, Like, if you've been driving your
Speaker 1: car long enough that you've hit that, you take some
Speaker 1: pride in in hitting that number, you should, yeah and so,
Speaker 1: And with car reliability being pretty great across the board
Speaker 1: these days, even that threshold isn't a death sentence for
Speaker 1: your car personally. Matt, I'm at miles on Homer. What
Speaker 1: how many of you have? I think a little over
Speaker 1: a hundred on how? Which are the names of our vans?
Speaker 1: By the way, if folks were wondering, listeners actually named
Speaker 1: our vans. So when stuck with the h motifs, since
Speaker 1: we're talking about Honda's How is for the sci fi robot.
Speaker 1: Homer is for the Atlanta Braves mascot that likes to
Speaker 1: run around and mess with people in the stands, and
Speaker 1: so that naming convention won the contests, right, Yeah, And
Speaker 1: so I think, really, you know, my car is a
Speaker 1: two thousand and six. I think part of this is
Speaker 1: is we just need a mental reframe on, you know,
Speaker 1: when it comes to how we view our car. And
Speaker 1: it's okay for some people to be car obsessed and
Speaker 1: to say that's my craft beer equivalent and I put
Speaker 1: more of my money there, but for most of us,
Speaker 1: for most of us, this is a place where we
Speaker 1: can save substantial amounts of money, enabling us to live
Speaker 1: the lives we actually want. Yeah, and I was thinking
Speaker 1: you mentioned how like it should be a badge of honor.
Speaker 1: Somebody should make like a bumper sticker with different mileage
Speaker 1: amounts on there, sort of like achievement badges, you know,
Speaker 1: like if it's all about gamification, and if we can
Speaker 1: find different ways to like mentally shift not only how
Speaker 1: you see your own vehicle, but how like the people
Speaker 1: around you see it, we should literally be wearing that
Speaker 1: as a badge of honor. And then as you progress
Speaker 1: in miles, you get to add like new stickers, and
Speaker 1: all of a sudden, like instead of like thirteen point
Speaker 1: one for like a half you know, twenty six point two.
Speaker 1: I want it to be actual miles that your car
Speaker 1: is currently on. There you go, were there? Yeah, advertise
Speaker 1: it to everyone. I always like the bumper sticker that
Speaker 1: people would put on like a crumby old Toyota camera
Speaker 1: or something that's like twenty years old, and it said,
Speaker 1: don't let this car fuol you my treasures in heaven,
Speaker 1: And it's just ironic. I like that. One of the
Speaker 1: other steps to buying a car that you must not
Speaker 1: skip is to ask yourself if you even need this car.
Speaker 1: We want you to assess your current situation. Just because
Speaker 1: you've always gotten a new ride every for six years,
Speaker 1: that doesn't mean that you should continue a trend. We
Speaker 1: want you to ask yourself, can we get by as
Speaker 1: a one car family? Like, what's the current and future
Speaker 1: state of working from home? What does that look like
Speaker 1: for you? Something like one in seven jobs are at
Speaker 1: work from home now. And if you used to go
Speaker 1: into the office but you don't anymore, it's worth questioning
Speaker 1: whether or not you actually need another car before you
Speaker 1: buy it. Yeah, you might be all about the idea
Speaker 1: of replacing that car because it's getting too old, and
Speaker 1: then you're like wait a second, I don't drive nearly
Speaker 1: as much as I used to write. A second, our
Speaker 1: cars sitting the driveway nine and nine percent of the
Speaker 1: time anyway, and there's always at least one home. Uh,
Speaker 1: maybe we only need one car exactly. And that is
Speaker 1: so true about cars, is that they sit idle so
Speaker 1: much of the time, something like of the time your
Speaker 1: car is not in use. And so yeah, if you
Speaker 1: can figure out that extra four percent of the time,
Speaker 1: you can save a bundle. And yeah, there are other
Speaker 1: ways to get around besides cars. That's part of it too, Matt.
Speaker 1: And that's what we want to emphasize is cargo bikes
Speaker 1: are one of our favorite ways for for people to
Speaker 1: haul their stuff around, haul their kiddos around, go get groceries,
Speaker 1: and just get dropped my kids morning at school on
Speaker 1: the bike, even though it was thirty five degrees. Uh
Speaker 1: it's fun. Yeah, yeah it is. And can I say
Speaker 1: how the Sometimes they'll complain, but we make a it's
Speaker 1: an event true. And what we're asking people to do
Speaker 1: is to look ahead and forecast their needs, not just
Speaker 1: get what they want. And Matt, you mentioned working from home,
Speaker 1: but I'm also thinking about size of the family here. Right.
Speaker 1: If you're if you're thinking about growing your family, maybe
Speaker 1: adding a kiddo or two into the mix, then that
Speaker 1: motorcycle probably isn't gonna cut it anymore. Or the two
Speaker 1: door Honda Civic, like, it's just it's not going to
Speaker 1: be the best purchase. And so I'm not going to
Speaker 1: be able to get the kid out of the car seat,
Speaker 1: uh in the back of a two door. Yes, but
Speaker 1: it's possible. I know there are people who listening right
Speaker 1: now who have done that. However, we tried that one
Speaker 1: time in a friend's car and it was extremely extremely difficult.
Speaker 1: Well true, and I think you know, for other folks,
Speaker 1: let's say they've already got a station Wagon and they're
Speaker 1: about to to bring home their second kiddo. Well, station
Speaker 1: wagon still works for a family affort, so you might
Speaker 1: not necessarily need to upgrade. These are the kind of
Speaker 1: questions you're gonna want to ask before you actually start shopping,
Speaker 1: is like, do I need this? Do I have other
Speaker 1: alternate forms of transportation? Am I actually driving nearly as
Speaker 1: much as I used to? Like? Do we need to
Speaker 1: be a two car family? Could we be a one
Speaker 1: car family? If you start to ask these questions, you
Speaker 1: might find that your need, or like the need you
Speaker 1: thought you had for to buy a new car, goes
Speaker 1: away completely. That's right. You might just discover that it
Speaker 1: was in fact a want. So you want to make
Speaker 1: sure that the car that you're buying, you know, works
Speaker 1: for your family and your lifestyle, but you also want
Speaker 1: to make sure that it fits with your budget. And
Speaker 1: a good rule of thumb that we've come up with
Speaker 1: that makes sense to us is that if you combine
Speaker 1: your net worth with your annual salary and then you
Speaker 1: take ten percent of that total, well, we feel that
Speaker 1: that is how much car that you should be able
Speaker 1: to afford. So, for example, let's say that you're in
Speaker 1: your twenties. Maybe you've got twenty five dollars in student
Speaker 1: loans still, but you make a hundred thousand dollars a year,
Speaker 1: so that gets you to seventy five thou right, so
Speaker 1: you should be looking at a car that costs around
Speaker 1: seventy dollars. I think a lot of folks listening right
Speaker 1: now they're not gonna like this formula, but we feel
Speaker 1: that this is a good practice. We think this is
Speaker 1: a good method, a good rule of thumb in order
Speaker 1: to spend less on vehicles, spend less on expenses that
Speaker 1: don't need to cost so much, and instead funnel that
Speaker 1: money towards long term investing. Uh So, another example, maybe
Speaker 1: you're in your thirties. Let's say you've got some assets,
Speaker 1: You've got a hundred thousand dollars in retirement, maybe you
Speaker 1: make a hundred and fifty thousand dollars. Uh And so
Speaker 1: for you, if that's your situation, that means you can
Speaker 1: afford a twenty five dollar car. I'm pretty sure we're
Speaker 1: gonna get some pushback from a lot of people who
Speaker 1: have vehicles that cost more than maybe what this little
Speaker 1: formula would allow them to purchase. But again, we think
Speaker 1: that this is if you are able to sit down
Speaker 1: with some easy, simple back of the napkin math, we
Speaker 1: think that this is going to get you within the
Speaker 1: range of what we think is financially responsible, especially as
Speaker 1: you are seeking to pursue something like some financial freedom
Speaker 1: or financial independence. I've always like to go even more
Speaker 1: stringent than this rule for myself, because my goals for
Speaker 1: my money are not support into a two B transportation.
Speaker 1: So it all depends also on how you think about cars,
Speaker 1: and so for us, we're saying we don't prioritize it
Speaker 1: them all that heavily. And you're listening to a podcast
Speaker 1: about personal finance, so of course we are going to
Speaker 1: try to persuade you to think similarly to the way
Speaker 1: we think when it comes to your money, and how
Speaker 1: more of money should be going towards investing so that
Speaker 1: you can grow it, not towards a depreciating asset totally.
Speaker 1: And let's let's keep talking about like what you need
Speaker 1: to do when it comes to to researching that. Certainly
Speaker 1: you need to research your budget how much you can afford,
Speaker 1: but then you also need to look into the reliability
Speaker 1: of the car that you want. That's one of those
Speaker 1: things that you want to assess before you start hitting
Speaker 1: up used car lots or scouring Craigslist, and so, yeah,
Speaker 1: does does the car that you want actually tend to
Speaker 1: hold up over time? You've talked Matt many times on
Speaker 1: the podcast about your the car you drove in college
Speaker 1: and how it was not very reliable and how I
Speaker 1: ended up costing you a lot of money because of that.
Speaker 1: So it's not just the sticker price to the car,
Speaker 1: but it's how much you're gonna be putting into it.
Speaker 1: Along the way. It's probably the least reliable vehicle and
Speaker 1: most expensive to have service yea, and Consumer Reports consistently
Speaker 1: ranks it as like one of the least reliable vehicles.
Speaker 1: We're talking about I had early nineties land Rover range Rover. Yes,
Speaker 1: so there you go, yep. Yeah, and so if you
Speaker 1: if you eat, I'll be on a beautiful dope car. Yeah. However,
Speaker 1: if when you're looking at the money, it doesn't make
Speaker 1: any sense. They look great, they cost you a lot
Speaker 1: of money. So you know, we place a high importance
Speaker 1: on on reliability as a metric when buying the used car,
Speaker 1: and some brands consistently perform better. But but be sure
Speaker 1: to check into the specific year, make, and model because
Speaker 1: reliability varies over time. You might find that the two
Speaker 1: thousand nine model was not so great, but the two
Speaker 1: thousand eleven they had improved it quite a bit, and
Speaker 1: so you're just gonna kind of want to dig into
Speaker 1: those details. Checking the reliability rankings can be helpful when
Speaker 1: it comes to ensuring that you're not buying, you know,
Speaker 1: a car that's gonna present a lot of issues once
Speaker 1: it's yours. Like you're talking about maintenance costs, but that's
Speaker 1: something else that you want to factor in, because that
Speaker 1: might be one of the reasons that you would prefer
Speaker 1: to go with a new car, right you don't wanna
Speaker 1: have to deal with the hassle or the cost of
Speaker 1: going to the mechanic. But the truth is that what
Speaker 1: you'll pay to maintain a used vehicle, if you've been
Speaker 1: savvy as a consumer, it really isn't all that much.
Speaker 1: The average ten year old car cost just over fos
Speaker 1: to maintain every single year. Uh, you're gonna pay less
Speaker 1: than one year owning and driving a used car than
Speaker 1: just what one monthly payment would cost you on a
Speaker 1: one So keep that in mind. Oftentimes we overblow maintenance costs,
Speaker 1: but in reality it is much much less. That's right, man.
Speaker 1: I think we we often overestimate the amount of money
Speaker 1: that we're gonna spend fixing up the old car that
Speaker 1: we have. We're like, that's just gonna be a money pit.
Speaker 1: But when you look at the numbers, that's just not true.
Speaker 1: That a ten year old car is actually is gonna
Speaker 1: cost you a whole lot less, and it's also actually
Speaker 1: gonna be for the most part, reliable. Obviously, you want
Speaker 1: to make sure that you find a used car that's
Speaker 1: more reliable than just the average one. But let's let's
Speaker 1: just talk about how we feel about new cars. And
Speaker 1: I'm sure people can infer at this point that we're
Speaker 1: not big fans, that we don't usually push people in
Speaker 1: the direction of buying a new car. And we already
Speaker 1: talked about how pricey new cars are, how they're there's
Speaker 1: so much more expensive than used ones. Although there are
Speaker 1: some cases when buying a new car isn't the worst
Speaker 1: thing that you could do. Actually, I wrote an article
Speaker 1: on our site about when it might make sense for
Speaker 1: some folks to buy a new car, And so if
Speaker 1: you're the kind of person who's up for keeping the
Speaker 1: same car for at least a decade, then I would
Speaker 1: say buying new isn't a terrible idea if you're like, listen,
Speaker 1: I want to know what's wrong with it. I don't
Speaker 1: want to chance it to a previous owner. I want
Speaker 1: to make all these decisions for this car. But I'm
Speaker 1: gonna own it for a long time. I think that's
Speaker 1: a different situation. And if you're in money year number seven, basically,
Speaker 1: if you've reached this point of financial independence, and I
Speaker 1: feel like this is a splurge that you can make.
Speaker 1: You can afford to buy a new car at this point,
Speaker 1: because it's basically it's a drop in the in the
Speaker 1: bucket compared to your overall net worth. And yeah, for
Speaker 1: for most folks that we would say, it's still a
Speaker 1: bad financial move. And it's an even worse financial move
Speaker 1: if you're looking to buy a new luxury car. And
Speaker 1: and that is because of like what you mentioned, Matt,
Speaker 1: with the rising ev adoption, you stay to lose even
Speaker 1: more money now buying, especially a luxury gas powered car,
Speaker 1: because those are going to depreciate I'm predicting more quickly
Speaker 1: in the coming years because there's gonna be so many
Speaker 1: great luxury evs that people are gravitating towards. Absolutely, dude, Yeah,
Speaker 1: I mean, and those are the ones that we're really seeing,
Speaker 1: Uh stand out. Have you seen pictures of the lucid Sedan? Yeah,
Speaker 1: I think is pure awesome. Note like so it's fancy,
Speaker 1: look so freaking cool. And you know another thing too,
Speaker 1: like you can buy a nice used car and it
Speaker 1: doesn't have to cost an arm and a leg. Consumer
Speaker 1: Reports they always make a like these great lists of
Speaker 1: the best used cars to buy under a certain price point,
Speaker 1: and so we'll make sure to link to their their
Speaker 1: list of I think they've got a list of best
Speaker 1: used cars that's under ten thousand dollars. We will make
Speaker 1: sure to put that in our show notes for this episode.
Speaker 1: But don't think that just because the average price of
Speaker 1: a used car is that thirty thou dollars, that you
Speaker 1: have to come even close to that number, because you don't. Yeah,
Speaker 1: I think so. I think we we benchmark against that number.
Speaker 1: We're like, all right, I'm gonna go I'm gonna go
Speaker 1: super cheap and I'll buy something that's twenty five thousand.
Speaker 1: It's like, no, you don't even have to do that
Speaker 1: or even or even just like worse than that, right,
Speaker 1: subscribing to the average and saying, all right, I guess
Speaker 1: you know, we're gonna shoot for something around thirty thousand dollars.
Speaker 1: Maybe we'll even go a little bit above average because
Speaker 1: we're unique, special, we're treating ourselves right, well, I think yeah.
Speaker 1: Another question that comes up when people are buying a
Speaker 1: used car is what about certified pre owned? Is that
Speaker 1: the best way to go? Does? And I think a
Speaker 1: lot of people instantly assume that if it's a certified
Speaker 1: pre owned vehicle that it's been taking care of so
Speaker 1: much better, or it is, of course it's worth the
Speaker 1: extra a few thousand dollars that the dealership is trying
Speaker 1: to charge for that. I mean, they told me there
Speaker 1: was a one thousand point inspection on that vehicle, so
Speaker 1: it must be worth the price that they're asking for.
Speaker 1: You will give yours the ten thousand points. It's like,
Speaker 1: what do these points mean? Right? Exact meaning anything anymore?
Speaker 1: But we would say not all CPO designations are made
Speaker 1: the same, like a different dealerships take a different tact
Speaker 1: towards what that means. And like I was saying, you're
Speaker 1: gonna pay a good bit more for any certified pre
Speaker 1: owned vehicle, So if you're looking to find the best value,
Speaker 1: that's not the best route to take. Whether you go
Speaker 1: certified pre owned or not, we still want you to
Speaker 1: have that car inspected by a mechanic that you trust.
Speaker 1: Because yeah, we're not completely against certified pre owned as
Speaker 1: a designation, but it's not a silver bullet for buying
Speaker 1: used cars. It's not like, all right, if I go
Speaker 1: in that direction, I'm not gonna have any headaches. That is,
Speaker 1: that is not the case, that's right. Uh, And so
Speaker 1: we've talked a lot. There's been a lot of lead
Speaker 1: up to actually buying a vehicle. But after the break
Speaker 1: we're gonna get to how you can actually make that purchase.
Speaker 1: All right, Matt, I feel like we've been long winded
Speaker 1: as far as there's been a lot to talk about
Speaker 1: when it comes to buying a car. But it is
Speaker 1: is fun, Yeah, it is. I think it's fun. I
Speaker 1: think it is too, I mean, and I think that's awesome.
Speaker 1: Times why folks end up spending a little bit more
Speaker 1: on their vehicles because it's just something, you know, we
Speaker 1: say that, oh, it's just transportation from point A to
Speaker 1: point B, but it is. It's got this other thing
Speaker 1: wrapped up in it, right, and it causes us oftentimes
Speaker 1: to spend more than we know we should. Well, and
Speaker 1: we've all got non negotiables when it comes to what
Speaker 1: we want in a car, and that is okay. It
Speaker 1: is okay to have some standards. Like for us, once
Speaker 1: we had our third kid, it was it was the
Speaker 1: the power soutomatics. Yes, we're like, we're not getting but
Speaker 1: we were able to find literally a five thousand dollar
Speaker 1: Honda Odyssey, a couple of years ago that had that feature,
Speaker 1: and it had some other things that we weren't even expecting.
Speaker 1: We're like, wow, they made them really nice into other
Speaker 1: six Like I was, I was shocked that they had
Speaker 1: that many features back then. But there have to be
Speaker 1: some things that you're willing to say no to in
Speaker 1: order to save money, right, That's kind of life is
Speaker 1: a series of trade offs. And yeah, if you want
Speaker 1: to be able to invest more of your money, well
Speaker 1: then buying a cheaper vehicle is one way to help
Speaker 1: you do that. But enough about that, let's start discussing
Speaker 1: how to go about buying and let's maybe start with
Speaker 1: talking about financing a car and our thoughts on that,
Speaker 1: let's do it all right, Well that basically our advice
Speaker 1: is don't do it. Don't do it. End of discussion,
Speaker 1: And yeah, do you have any more points? Well, basically
Speaker 1: just that you know, we've seen a massive amount of
Speaker 1: inflation in used car and new car prices, that those
Speaker 1: have been the leading edge of some of those inflationary
Speaker 1: numbers that we've been seeing. And in normal times, though,
Speaker 1: cars are a depreciating asset and so we prefer for
Speaker 1: you not to finance something that's quickly going to depreciate
Speaker 1: in value. We would say, save up, pay cash. Is
Speaker 1: it incredibly easy to save up ten grand, twenty grand
Speaker 1: or more even to buy that car you want. No,
Speaker 1: it's not easy, but it's the best move money wise.
Speaker 1: And so not everyone agrees with this. I know some
Speaker 1: people think, well, what's the big deal of financing a vehicle? Well,
Speaker 1: we would say, yeah, you can always buy a solid
Speaker 1: used car in that five to price range, and so
Speaker 1: we would say that's where you should opt instead if
Speaker 1: you don't have the cash on hand in order to
Speaker 1: buy the more expensive car that you really want. All right,
Speaker 1: so now that you know our stance right that we
Speaker 1: would prefer you to pay cash for a car, please
Speaker 1: please please pay cash for your car. But are you
Speaker 1: begging now? Yes? Uh? But the thing is, like, I know,
Speaker 1: not everybody is going to listen to us, and so
Speaker 1: if you do decide that you don't want to listen
Speaker 1: to us, you're gonna be you and you are going
Speaker 1: to take out a loan. We want you to be
Speaker 1: smart about it. We don't want you to become a
Speaker 1: payment buyer where you are only focused on the amount
Speaker 1: that you're paying every single month. When you have to
Speaker 1: make that car payment. So many, so many people, they
Speaker 1: focus on the payment that they're gonna pay, and they're
Speaker 1: willing to stretch out that car loan and definitely is
Speaker 1: essentially to make that car payment make sense for exactly. Yeah,
Speaker 1: we want you to keep the length of your car
Speaker 1: loan reasonable, like around thirty six months, because that would
Speaker 1: ensure that you aren't buying a car that you can't afford.
Speaker 1: Because yeah, if you if you do have to stretch
Speaker 1: that out to something like seventy two months or even
Speaker 1: more in order to buy the car that you want,
Speaker 1: you need to go back to the drawing board and
Speaker 1: you need to pick another car or something that you
Speaker 1: can afford. If you don't do this, you are setting
Speaker 1: yourself up for potentially big financial problems. If you finance
Speaker 1: a car over a longer period of time, that's when
Speaker 1: you might end up only more on the car than
Speaker 1: it's actually worth because it's been years since you actually
Speaker 1: purchased the day things right, then you get in an
Speaker 1: accident and you're you're underwater, and that puts you in
Speaker 1: a bind financially. And so the other thing too is
Speaker 1: where you get financing matters, right, This could be the
Speaker 1: difference between an interest rate of like two and a
Speaker 1: half percent or twelve percent or even bigger, and the
Speaker 1: app could be even larger, and that's going to impact
Speaker 1: your monthly payment as well as a total amount that
Speaker 1: you pay an interest over the life of that loan.
Speaker 1: And so instead of just going to a lot, a
Speaker 1: used car lot, and buying that car there and financing
Speaker 1: it as well, the best thing to do, and the
Speaker 1: simplest thing to you, is to check with your local
Speaker 1: credit union before you head out to go shopping. Get
Speaker 1: a proof for alone there before you start to look
Speaker 1: around for vehicles. But again we would say skip all
Speaker 1: this hassle and just pay with cash. That is by
Speaker 1: far the best method. But if you are going to
Speaker 1: finance your car, make sure that you're getting that financing
Speaker 1: from a local credit union. That's where you're gonna get
Speaker 1: the best rates and that's gonna save your money over time.
Speaker 1: But again again, forget all that and just pay cash.
Speaker 1: Pay cash. All right, let's keep moving. Let's say you
Speaker 1: found your car. It's adorable, uh, and you can easily
Speaker 1: afford it. That's great, right. What is next is that
Speaker 1: you need to run a vehicle history report on a
Speaker 1: site like Carfax. You want to make sure that you
Speaker 1: are getting it checked out. That's gonna tip you off
Speaker 1: to the history of the car. It's gonna let you
Speaker 1: the previous ownership, any accidents that may have occurred, and
Speaker 1: then after that, you actually want to get it checked
Speaker 1: out by an independent mechanic before you purchase it. This
Speaker 1: is one of those instances where you gotta do something.
Speaker 1: You know you should do it, but you're going to
Speaker 1: be so tempted to skip the step because it's going
Speaker 1: to require some extra legwork from you. If you're body
Speaker 1: from CarMax or Carbonna, you can go ahead and buy
Speaker 1: it because of that seven day return window. That's something
Speaker 1: I was able to take advantage of when we purchased
Speaker 1: our Odyssey from Carbona. I had plenty of time to
Speaker 1: go get that checked out at a Honda mechanic and
Speaker 1: he was able to discover that that timing belt needed
Speaker 1: to be replaced, and that was something that carbon A
Speaker 1: covered for me. So again, that's one of the advantages
Speaker 1: for some of those big sites like that. But if
Speaker 1: you're buying from a private seller, this needs to be
Speaker 1: a condition of the sale. You need to have worked
Speaker 1: out ahead of time. That you have the option or
Speaker 1: the ability to go and get this thing checked out.
Speaker 1: You know that the pain job might look sweet, but
Speaker 1: you want to make sure that you aren't buying a
Speaker 1: money pit. Yeah, for sure. I've done that many times,
Speaker 1: Matt taking that car to my mechanic and sometimes he's like, Yep,
Speaker 1: it looks great, you should buy this, And other times
Speaker 1: he's like, oh, not so much, and I have to
Speaker 1: say bye, thank you, but I'm not going to purchase
Speaker 1: your car. And one other thing I think that makes
Speaker 1: sense in today's climate that's worth stressing when you want
Speaker 1: to find a good deal on a used car is
Speaker 1: that it might even make sense to fly somewhere to
Speaker 1: buy the car that you want. That might sound strange,
Speaker 1: It's like, well, aren't there plenty of used cars right
Speaker 1: near where I live. Well, yeah, but it's similar to
Speaker 1: real estate pricing dynamics fluctuating different parts of the country,
Speaker 1: and supply chain issues might mean you've got to get
Speaker 1: on a plane to get what you want at the
Speaker 1: same time. But but even before the supply chain issues, Matt,
Speaker 1: I had a friend looking to buy, of course, a
Speaker 1: Honda Odyssey, just like just like you and I drive.
Speaker 1: She found that the best deal was on a van
Speaker 1: down in Orlando, Florida, and so she flew down, she
Speaker 1: bought it and drove it home. That's small inconvenience saved
Speaker 1: her a couple of thousand dollars. And so I would
Speaker 1: suggest if people expand your car search beyond the town
Speaker 1: that you live in, if you want to save even more.
Speaker 1: You know, it's not it's not necessarily going to always
Speaker 1: be the best move for you, but especially if you
Speaker 1: can fly to a city where the plane ticket is
Speaker 1: gonna cost you bucks and the gas on the way
Speaker 1: back is going to cost you another hunter bucks, but
Speaker 1: you can say fift ndred on the price of the car,
Speaker 1: then that flight is going to make sense for you.
Speaker 1: That's right, and then you can binge listen to how
Speaker 1: the money all the way from lucky you at two
Speaker 1: x speed. One other thing to mention, given the pricing
Speaker 1: insane the in the car market these days, it just
Speaker 1: makes a lot of sense to hold off as long
Speaker 1: as you can before upgrading your car if you've determined
Speaker 1: that you do need to replace it. Timing matters now
Speaker 1: more than it normally does, because we believe that prices
Speaker 1: are going to come back down to earth. But the
Speaker 1: car market isn't going to get sorted out instantly, right,
Speaker 1: It's gonna take an overtime. And so if you can
Speaker 1: wait until either you know, later this year, even wait
Speaker 1: until three, that is likely going to ensure that you
Speaker 1: aren't paying an inflated price due to the supply chain
Speaker 1: and chip issues that we mentioned earlier, right, And ultimately,
Speaker 1: when it comes down to it, Matt, we want how
Speaker 1: the money listeners to build wealth. And it's not that
Speaker 1: we want you to drive the crumbiest card that you
Speaker 1: absolutely hate. It's not punishment exactly that that is not
Speaker 1: what we want either, like I really like my two
Speaker 1: thousand and six hond Odyssey. We just want what's best
Speaker 1: for you, for future you, not for right now you.
Speaker 1: And going back to kind of what we said earlier,
Speaker 1: if you can reframe this choice and you can say, look,
Speaker 1: it's allowing me to live my life even more fully
Speaker 1: in these other areas because it's allowing me to reach
Speaker 1: that goal of financial independence even quicker. It's giving me
Speaker 1: greater choice in what I do with my day to
Speaker 1: day when it comes to my job. Like we would say,
Speaker 1: wealth is the fancy car that you don't drive, and
Speaker 1: so yeah, if you want to build wealth, I've got
Speaker 1: fancy cars. They're parked in the garage of Marathaira. Those
Speaker 1: are future fancy cars that I could potentially buy, right
Speaker 1: And so, yeah, you're listening to How the Money because
Speaker 1: you want help building wealth, not because you want to
Speaker 1: buy a the fanciest of the fancy cars. And some
Speaker 1: of our listeners do like cars more than others. And
Speaker 1: again that's okay, do your thing. You don't have to
Speaker 1: do it exactly the way we do it. But yeah,
Speaker 1: if you really want to build wealth, if that's you know,
Speaker 1: one of your top tier goals, you'll be more willing
Speaker 1: to drive something that doesn't look as pristine. You'll be
Speaker 1: willing to forsake some of those finest amenities or the
Speaker 1: fanciest new touch screen in your car in order to
Speaker 1: drive something that's going to help you reach that goal
Speaker 1: of financial independence more quickly. You might be able to recognize,
Speaker 1: just like I can, just like Matt can, that the
Speaker 1: new Rivians are the best looking truck ever made in
Speaker 1: this world, and that you absolutely really really want one,
Speaker 1: but at the same time say, Nope, not going to
Speaker 1: do it, because my other goals are more important for
Speaker 1: the time being, that's right. One of the thing real quick,
Speaker 1: the most popular cars for wealthy folks, this is according
Speaker 1: to the Millionaire next Door are Toyotas and Honda's so
Speaker 1: cameries and handah accords like these are the top pick
Speaker 1: for folks who have a million dollar net worth. The
Speaker 1: majority of those people aren't driving luxury vehicles, and so
Speaker 1: it comes down to the question do you want to
Speaker 1: look rich or do you want to be rich? The
Speaker 1: car that you drive has a lot to do with
Speaker 1: that eventual outcome, and that's why we want you to
Speaker 1: buy cars the right way. Yeah, so hopefully that was helpful.
Speaker 1: And Matt, I think one of the things we mentioned
Speaker 1: before too is if you have an extra car sitting around,
Speaker 1: now it's a great time to sell it. Now, it's
Speaker 1: a great time to actually maybe rethink. If you're driving
Speaker 1: two nice of a car and you're like man, Matt
Speaker 1: and Joel, they just they just kind of got got
Speaker 1: under my skin, and now I want to do something
Speaker 1: and maybe get rid of this car payment, or find
Speaker 1: a way to drive something that's even cheaper. Well, selling
Speaker 1: one of your cars and becoming a one car family,
Speaker 1: or or downgrading to something cheaper and taking that extra
Speaker 1: cash so that you can stock it a way for
Speaker 1: your future. Now it's a perfect time to do that,
Speaker 1: take advantage kind of of the current market dynamics and
Speaker 1: save you some money. And actually, I just realized we
Speaker 1: did an entire episode dedicated to becoming a one car family.
Speaker 1: I just looked it up on my phone two forty two.
Speaker 1: That's episode two forty two if you want to be
Speaker 1: swayed even more to becoming a one carr family. And
Speaker 1: we recorded that while I was while we were a
Speaker 1: two car family. And shortly there after that's I took
Speaker 1: my own medicine. Oh, I love it, and we became
Speaker 1: a one car family. And so hopefully, maybe maybe this
Speaker 1: episode will help push some people in that direction. To
Speaker 1: all right, let's quickly mention the beer that we enjoyed
Speaker 1: during this episode. You and I enjoyed a Pothole City,
Speaker 1: which is a rocky road stout by Pipe Works Brewing
Speaker 1: Company out of Chicago, Illinois. What were your thoughts on
Speaker 1: this one? Bud? All Right, I'm gonna say chocolate marshamallowy.
Speaker 1: It was a perfect winter beer, Like It's a good
Speaker 1: deep dark stout like this is very dark beer perfect
Speaker 1: for these like cold winter months. Yeah. Absolutely, Yeah, it was, dude.
Speaker 1: It was super toasty and like roasty um. You know,
Speaker 1: I was I was totally picking up some of those
Speaker 1: marshmallow vibes. But it wasn't like the fresh out of
Speaker 1: the plastic bag marshmallow. It was like like a dark brown,
Speaker 1: maybe two charred marshmallow, like like you're getting like you're
Speaker 1: doing some smores like it. It had like some of
Speaker 1: that bet on a fire for a minute and you're like, oh, shoot,
Speaker 1: can you like blow it out real quick? But it
Speaker 1: had some of those bitter notes going on, but it
Speaker 1: provides that balance when you have when you've got that
Speaker 1: multi sweetness going on, you need some of that roasty
Speaker 1: bitterness to kind of bounce it out. Otherwise you just
Speaker 1: have this pure dessert beer, which isn't always gonna fly
Speaker 1: with folks. So I'm glad you and I got to
Speaker 1: enjoy this one Pothole City by Pipe Works Brewing, no doubt.
Speaker 1: All Right, Matt, Well, that's gonna do it for this episode.
Speaker 1: For listeners who want show notes links to some of
Speaker 1: the articles we mentioned in this episode, go to our
Speaker 1: website how to money dot Com. You'll find them there.
Speaker 1: That's right, buddy. So until next time, best friends out,
Speaker 1: best friends out,