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How Cars Keep You POOR!

How Cars Keep You POOR!

[BREATHES DEEP] Aaaaaah! Don’t you just love that new car smell? Smells like power and freedom! Actually, it smells more like petroleum-based
solvents evaporating off vinyl and plastic. Wow, buzzkill. Let’s see if you still like that smell when
you find out what it’s really costing you… I’m locking the windows. [SOUND OF WINDOWS ROLLING UP] [MUSIC] Since the auto boom of the 1950’s, cars have
become an integral part of American society. Car companies spent 14.2 BILLION dollars in
advertising alone in 2014 and that number is only rising. They convince us that once we’re behind
the wheel, our families will love us more, our neighbors will envy us, and our freedom
to go anywhere is secure. Unfortunately, they’re more likely to take
away your freedom and security. New cars are a financial triple threat. We borrow money at interest, to buy an asset
that we have to PAY to maintain and…here’s the big kicker…that drastically depreciates
in value. Wait… what IS depreciation, anyway? Hey Julia, would you like to buy some ice
cream? Uh, sure, I guess– That’ll be four dollars. I wouldn’t pay a nickel for that! But I paid four dollars for it twenty minutes
ago! That’s depreciation. Go wash your hands. Cars retain their value about as well as ice
cream on a hot day. A new car will depreciate 63% in the first
five years. 10% of that the MOMENT you drive it off the
lot! Calling cars a “bad investment” is like
calling a honey badger a bad heart surgeon. What? I mean they’re not an investment at all! Exactly. I mean, can you think of anything else you’d
spend that much money on that loses value that quickly? Oh, I don’t know. How about a garage full of beanie babies? [HORROR MOVIE MUSIC] Heh, I told you the 90’s are comin’ back. Sure, hon. And don’t think you can get out of this by
leasing either! Leasing companies set their prices so that
you pay for the depreciation of their vehicle, and when it’s over they still have an asset
they can re-sell. So let’s set a few simple ground rules that
will put you in the driver’s seat instead of being taken for a ride: Number One. Buy a car that’s 5 years old. Right away, you’re skipping the majority
of its depreciation. Number Two. Save up to buy a car in cash. Paying interest on something that loses value
is like gaining weight from exercising. All pain. No gain. Number Three. If you can’t comfortably afford to save an
amount equal to your car payment, you can’t afford it. So if you’re not saving $300 a month, you
shouldn’t take on a $300 car payment. So how much money is actually at stake? I think it’s time to…. RUN THE NUMBERS! Let’s say I buy a new car for $20,000. I put $4,000 down, and I finance the rest
over 60 months at 4.25%. My monthly payment will be– $295.42! That sounds pretty normal. But check this out. What if you bought that same car, but a 5
year old model, which costs you 63% less — or $7,400. Put your same $4,000 down, and with the same
loan arrangement, you’re looking at a payment of just $62.78/mo. That’s a monthly saving of– $232.65! I could get a massage every other week with
that! You could. Or, you could take those monthly savings and
put them into a growing asset, like a home or a mutual fund. And if you continued to do that EVERY time
you paid off the car, even at a very conservative 7% per year return, in 35 years you’d have
over… $421,459! Really? Wow. Now…is that enough to retire on? Probably not. But that’s just one thing you can start
doing now to prepare for your future. There are many, many more. Y’know, as much I like that new car smell,
I don’t think I’d spend half a mil on it. Let’s try this instead. Ooh, what’s that? EARLY RETIREMENT, BABY! Bam! And that’s our two cents! [MUSIC]

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42 thoughts on “How Cars Keep You POOR!

  1. used cars will never have the same interest as a new cars because it is bigger ridk for the bank so i think your calculations we a bit off

  2. These people don't want you to drive a car. Take public transportation or ride a bicycle to work! Why don't you live in a cardboard box in an alley, you'd save tons of money!! I've had my truck for 27 years, I do 95% of my repairs. Stop eating! You could save tons of money!! How about getting a college degree in a high paying field? Then you could easily buy a house, a car for you AND your wife, save up for the kid's college.. these actors are Debbie downers!

  3. 1-Bank Loan with interest
    5-Oil Maintenance and repairs
    6-Unlawful Parking tickets
    7-Parking fees
    8-Unlawful Driving tickets
    11-Driving comfortably to dine
    12-Driving comfortably to shop
    13-Aftermarket parts

    Don’t buy a car and save all the money you’d pay towards all this and you’ll have thousands of dollars saved and/or invested

  4. Marriage keeps you poor,
    Cars are tools that get you from Point A to Point B.
    Get a cheap car and drive it until the wheels fall off, then buy another one.

  5. It isn't an "asset" to maintain. It's a liability. Not knowing the difference between an asset and a liability is why so many are poor. An asset makes you money. A liability costs you money.

  6. For some of us, car is the cheapest way of moving about. Obviously buy used to avoid deprecation as much as you can, do not borrow loans with insane interest (if you buy cheap used car, you shouldn't have to.. and it's unfair as borrowing with high interest is never an ideal situation car or otherwise), and put some time and effort to know how to do basic car maintenance so you can avoid high labor cost and probably use MUCH better quality aftermarket products that will make your car last. Oh and make sure you buy cars with brands and models that are solid. Do internet research, ask mechanics (because their job is to fix people' mistakes lol).

    Car can be an asset if purchased right. Having the right car allows you to be at other places of opportunity (job, business, social networking, etc) which can enhance your cash flow. As always with any investment, carefully plan ahead and decide what works for you. If you live near groceries and work and don't actually drive often, perhaps just getting a bike/scooter will do the trick and uber occasionally. For some, you need to travel often but you don't need to haul luggage and don't need to worry about winter road condition… then get a motorbike. Cheaper insurance, maintenance and much better fuel economy. Carpool if all you need is for work. Etc etc… people are poor due to poor mismanagement, not because of cars.

  7. These idiots don't count the depreciation on the used vehicle. Add that to the payment. When you buy used you buy the second half of the vehicles life, the worst half. Zero warranty. Seats are wore, drivetrain is wore etc.

    Lastly, you can't compare a new vehicle with a used one, they aren't even in the same category to compare.

    Buy a brand new Toyota Yaris, maintain it and drive it for 10 years and instead focus on growing your income. $200 a month is irrelevant when you make $20k a month in income.

    New or used most people are poor because they focus on pennies Instead of dollars.

  8. Waow, guys You were born to do such videos, such good partners on videos, such funny jokes! "Early retirement baby, bamm!" XDXDXD
    Absolutely loved it, thank You! 😁

  9. I hate cars. I don't want the current models, or an electric or a driverless when they come out. I don't have one, and don't need one. The money I've saved I've used for overseas travel, home renovations, new appliances and furnishings…..and a pair of very nice pushbikes.
    To me, it was never about their environmental impact or trying to make a point about anything – I'm not even an environmentalist – its just about being sensible with money and not having what i don't need. I can walk, cycle or rail it. I live near everything, including work.
    Set yourself free and cut your losses……..the money you save will excite you.

  10. I've spent two hundred thousand over the last twenty years on vehicles and have nothing to show for it. Hope you will be smarter then me.

  11. This certainly is applicable in US only. For developing countries (South East Asia), it's a totally different story. In Vietnam, a car may have a depreciation rate as low as just ~$100 a year with a starting price averagely at 4-5 times of that somewhere else in the world. For example: a Suzuki Swift starts from EUR 11k in Europe averagely, EUR 6.5k in India and a staggering EUR 19k in Vietnam (with some big features removed)… That's just the showroom price. As a reason, lots of people are looking at used cars as a solution and the supply is simply not enough even with the above unbelievably low depreciation rate. A Fiat 500 (2009 version) can be sold with a fortune in 2019 because Fiat left the market and no one wants to sell their old car less than.

  12. Retired early at 54…..bought cash cars my entire life and drove them all for approx 15 years….the car i use now….is a 1998 Chevy Lumina 3.8 liter….240k miles today, bought it in 2002, with 17k miles for $5,000. cash still running like a champ.

  13. You are forgetting the emotional attachment that some people have to this chunk of metal. It is their space, their pride, their joy. The feeling that you can get in it at any time and just head off to wherever you want to go with very little forward planning, can be priceless.
    I don't see mass transport systems giving people the same levels of convenience, unless you live in a major capital and you don't need a car.
    You're gonna be dead a very long time. I'd rather have spent my time and money on a few nice cars than leave 40% to the taxman and taken buses all my life, with stinky bastards caughing and spluttering all over me.
    And what the hell in life doesn't cost you money?

  14. I bought 3 Years Old BMW for 20K CHF cash. The economics on in and the joy are very high. Got 175K km, so i got it for 10-15K less. It's a face-lift 2016 and comes of like a new car. Can sale it anytime, but to drive it instead a oldone it s worth it 100%. Peace

  15. I've been without a car for a year and I tell you there's a sense of Freedom…here let me tell you how I really feel; FUCK your expensive insurance, FUCK your high gas prices, FUCK you Thieving Lying Ass Car Dealers, FUCK your Tax, Plates and Title charges, FUCK you Thieving Lying Ass Mechanics and auto parts Rip-Off companies, FUCK your Speeding Tickets Fines and Court/Lawyer fee payments, FUCK your polluting chemicals spills, FUCK your car wash and smell good Toxic chems, FUCK your expensive Oil Changes, FUCK your Highway Tows Fees…..I'm calling an UBER. Everything else I can get delivered or ride my E-Bike. And, because I actually DO save money…I'm able to rent ANY type of car whenever I decide to go on a vacation or leisure travel. 

    That's FREEDOM my friends…think about it? Think of every time you heard, "What it was going to cost you$$$ to keep that machine running? And, you felt you had no choice, or when deep inside you knew they were ripping you off? Don't you wish you could have said, FucK You I'm out!!!?

  16. Where I live (west Scotland) most people "need there car" , funny that, they park them up ,23 hours in 24 ,apart from driving to work ,(on a major bus route) drive to work? less than 1 hour , then they go to the shops ,(20 min walk) then they visit granny on Sunday (1 hour on bus) then they join the gym at "nut job "cost ,and do not keep up with going  to said gym ,but have to keep paying subs ,otherwise their credit score is screwed , and then ,just when it can"t get any worse ? they order take away food , from the local takeaway ,15mins walk away , these people keep the world going (round)and die young-ish

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