Are $1,000 Car Payments Becoming the New Norm?!

Are $1,000 Car Payments Becoming the New Norm?!
Jump start your journey with our FREE financial resources: moneyguy.com/r...
Reach your goals faster with our products: learn.moneyguy...
Subscribe on KZbin for early access and go beyond the podcast: www.youtube.co...
Connect with us on social media for more content: moneyguy.com/l...
Take the relationship to the next level and become a client: moneyguy.com/w...
Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.

[@RobWilliams007]

Side note: when buying a car with cash, don’t tell them that until the deal has been negotiated. They will often expect to make money off of you through financing. Don’t give up your cards.

[@jeremyorwhatever]

Get a loan and pay it off in two months.

[@RobWilliams007]

@@jeremyorwhatever you can do that too as long as you don’t mind the credit hit or you’re in the middle of a real estate deal, let’s say.

[@mikaylajoymichaels8400]

@@jeremyorwhateveryou just have to be careful because sometimes they have a fee for paying off early

[@jeremyorwhatever]

@@mikaylajoymichaels8400 I think this is rare. I paid off Honda and BMW loans early and it was no big deal.

[@jeremyorwhatever]

@@RobWilliams007 I won't touch my credit if I were remotely interested in a mortgage.

[@freedomworks3976]

I never felt wealthy until I had no payments ❤

[@mandypdx]

How does a car make or break? Wild

[@zenfishbike]

I bought a BMW 530i for $11k and paid cash. Yeah it's a 2003 with 105k miles but its in pristine condition and a sweet ride.

[@shirleymiller4391]

Sold my car this year and became 1 car family. I work from home and we don’t have any kids. Listening to your show definitely helped me make this decision. Saved $650/month. Made $12K off of sale too! I think this should be talked about more with more people working remote. Most advice I found was on selling car to buy a used one in cash. But maybe my situation was a no brained I was just being stubborn for too long 😂

[@clintonlunn7582]

I do the same. It's great. Haven't owned my own car since 2019.

[@jeremyorwhatever]

Dual high income family with two kids in daycare. Spouse and I both proud of still being a one-car family (have been for our 12 year relationship). Trying to make it last as long as possible.

[@shirleymiller4391]

@@jeremyorwhatever I feel that. Not having a car payment now makes me never want to go back 🤣. I am fortunate I live in an area where I can walk or bike to a lot of stuff.

[@ictrlaltdeleteu]

I think you need kids to be called a family.

[@Tech_Geek247]

Cars are crazy expensive these days and like me who is a remote worker rarely needs a car anymore. I owned a 2019 Tacoma but now as a 100% remote worker, I couldn't justify having a vehicle that basically was only used on the weekends. I sold it for 7K over what I paid (after 2 years of use) and used that money to buy a used 2015 Mazda6 that I paid for in all cash (10K OTD) applying the profit from the Tacmoa sell. I've now owned the Mazda6 for 27 months (and likely will keep owning for another 2 years) and during that time been paying myself what my old Tacoma payment was ($609 per month). I'll now be in a much better place financially whenever I decide to buy my next vehicle and for the time being enjoying 4.5% interest being paid on that savings vs. me paying the bank interest on an expensive car loan.

[@numberfortyone]

It’s all about priorities. You can be wealthy and have crazy car payments but you’d better love your job because you’re making yourself that much more reliant on it. We’re a one-income family by choice so that my wife can stay at home. We drive our 2015 Accord to the park with my daughter instead of rolling up in a Lexus to pick her up at daycare. I’ll always choose that time with my daughter.

[@Mac-pluto]

You shouldn't be buying expensive/luxury cars if you don't have the cash on hand to buy it if you so choose. If you are financing the car at less than a 5% interest rate and keeping the money invested.. by the time you hit year 3, the interest earned per month is paying for the car payment itself.

[@TeKnoVKNG23]

I'm glad I bought a reliable car back in 2014 and it's still running great today and been paid off for awhile. During Covid I had the dealership offering me 2-3k above book value every time I'd go in for an oil change or routine maintenance, and now the interest rates are sky high and car prices are absolutely insane. I've been thinking about getting something new since I'm getting toward 10 years and there are a lot of newer safety features and things even on the 2-3 year old used cars now, but the market is still crazy and needs to come down a bit before I'd even think about looking. Worst car payment I ever had was about $400/mo. on a 6 year note because I had bad credit at the time after some financial troubles. Refi'd it down to $300 a year later and paid it off early. At this point in life I just really don't want another payment.

[@amazinglats6020]

10 year old car isn’t bad, my car is pushing 24 years old. Still working great. Only has 88k miles on it.

[@TeKnoVKNG23]

@@amazinglats6020 Yeah I'm right around 93k right now and it still runs great. I think it's just I'm getting to a point in life I may need to upgrade due to wanting to get a place in the mountains, going skiing more often, stuff like that. I'm in no hurry though, just at some point I want to upgrade to an AWD vehicle with a big more cargo room.

[@TheFootbaldd]

What new safety features? They have taken responsibility from the operator, but haven't made any major leaps in crash safety. I am rotating a 96 ranger (300k), 06 ranger (250k), and a 01 Montero (120k) until I get caught up on home repairs and max out investments. Then I will look to get down to one beater and one nicer used car.

[@andiclemenza6476]

Omg! Meeting Daniel for the first time ❤

[@getinthespace7715]

I bought a 2 year old truck for $20k under original msrp (-33%)... Then I realized that was $750/month depreciation. Ouch. On a 60k loan at 9% interest for 60 months payments would be $1245, of that 796 goes towards principal. The rest is interest. So for the first couple years they are shelling out $1245 a month and will generate less than $2k in equity in the vehicle. Not smart.

[@gojl5567]

I've come the realization that people don't save for a car until their car is about to die. I was taught to start saving for one when I pulled out of the car lot. Now granted my 2017 Ford Fusion isn't really fancy, but a $350 payment seems a lot less scary and I paid it off 3 years ago. Also in the example Monique has $65K saved which means she can pay cash for the next car.

[@eugenechurch6135]

Bless this show saved my life and my wife's life.

[@ChrisLittmann]

29:00 I am right there with Spencer and am surprised a little more grace isn't given here. IMO, if someone is managing 18% savings while also putting 20% toward childcare needs, that's great! The Money Guy team discusses the increases in home and car costs frequently, but this felt like another area where people are getting drilled right now. (I've seen two consecutive 7% increases at my son's daycare.) Sending well wishes to all the other parents fighting this thing and dreaming what they'll do with that 20% of their budget 4-5 years from now!

[@stratoblaster92]

While I agree that buying a new car is monetarily not good ever (ie....a used car even repaired by a shop dozens of times is still cheaper than a new car these days), there is always missing information regarding new car purchases. Mind, I bought a new car in 2014 at 1% that I still drive today and love. The depreciation of a car is irrelevant unless or until you sell the car. People should do more research on cars before buying them. Understand what your needs are in a vehicle, and do that. Not just because someone said these are good and those are bad. My personal situation is that I love cars. It's an expensive hobby. But I tend to buy special cars that depreciate less, or not at all; and I tend to keep cars for 10+ years. It can be done, but you have to be smart about it.

[@InReality33]

Thank you guys for helping me deal with my past financial mistakes! But the real mistake was naming that boy Brogan!

[@TheAlliput]

Do you refer only to the finance cost, or do you include things like insurance, gas, repairs, taxes and so on?

[@lzhu87]

I doubt those making medium household income are buying new cars. If they are, they shouldn't, considering the average new car is $50k and there are only a handful of models selling below $30k.

[@chetanjilhewar1669]

I agree. 1000 dollars are a lot per month. I got a new car under 32000 dollars which come out to 469.00 per month. I did it for 6 years. But I am putting in extra 25 dollars on top of my monthly car payment. Which should be within 5 years or 5 an half years.

[@chetanjilhewar1669]

Also I wanted to know if this 1000 per month for 6 or 7 years.

[@skryptec]

I wouldn’t drive a Nissan because of weak Jatco transmissions or a BMW cause they are endless money pits.

[@MoneyGuyShow]

The Versa was a placeholder because one of my team members has one and the price point worked. The case study was to put visuals with the numbers- unfortunately there are tons of comments on the placeholder choice 🤷‍♂️. Reminds me of my uncles yelling at each other and cracking jokes over Ford, GM, or Mopar on NASCAR Sundays.

[@skryptec]

@@MoneyGuyShow Have you considered doing a collaboration video with someone like Scotty Kilmer to help your viewers find an affordable and reliable car? he lives in clarskville tn which isnt too far from yall in nashville. i also hate the traffic downtown now since covid. seems like everyone and their mother has moved to nashville.

[@siqlegit]

Should you include car insurance and car payment in the 8%?

[@telerye]

i would

[@IL_Bgentyl]

Hard disagree. Longer loans are very advantageous for better rates. If there’s no early pay off penalty it makes no sense to take the higher interest. Example I had to replace my hvac. $15k at 0% for 3 years. You’re high if you think I’m paying it off early. My interest in getting on cash pays it off by that time.

[@turbochoupette]

If you are looking for a more luxurious car, remember that de cost to fix that car will be way more important that it could be for an average car. I sell car parts and I see the face of those bmw guys when I tell them the price. Also remember guys that some cars are loosing value more quickly than others. The budget of a car is way more complex then just de price of it.

[@michaelhatfield5808]

Is a luxury car classified as such by brand or price? I think of 80K Fords and Chevrolets that cost more than a 5 Series.

[@chetanjilhewar1669]

Really?

[@michaelhatfield5808]

@@chetanjilhewar1669 Yeah really. This is a valid question. At what price point is a vehicle considered luxury?

[@chetanjilhewar1669]

@@michaelhatfield5808 good point.

[@blade643]

@@michaelhatfield5808they only consider lower end models as proper for 20/3/8. A 4runner is considered luxury to them.

[@jeremyorwhatever]

I vote price.

[@joshuavoss1387]

I have 6 kids, the accord and Corolla aren’t realistic I need the sequoia/ passenger van. I was looking to replace my 15 year old sequoia and im seeing used sequoias going for over 90 grand! I appreciate the 20/36/8 but leaning more 20/48/10 because this market is insane.

[@hockeyhalod]

I guess I'm not normal. I went against the BMW. Though I wouldn't want the Nissan unless someone could show me a good safety and reliability rating. Gimme that Honda/Toyota/Subaru.

[@MoneyGuyShow]

The Versa was a placeholder because one of my team members has one and the price point worked. The case study was to put visuals with the numbers- unfortunately there are tons of comments on the placeholder choice 🤷‍♂️. Reminds me of my uncles yelling at each other and cracking jokes over Ford, GM, or Mopar on NASCAR Sundays.

[@hockeyhalod]

@@MoneyGuyShow That's very fair! Thank you for even replying, haha. Nissans could be great for some, but I have never enjoyed their stats, haha. I was just wondering if I was weird for not caring about what people drive. Just make sure it is safe!

[@kreem82]

$925 payment on my model 3 for 60 months w/ $5k at closing....working to pay off in 3 years. i also max my 401k, Roth IRA, and HSA

[@Qiuziarui]

Used gas cars should only be purchased for less than 7k max nowadays to make sense

[@efrenojeda949]

Bo is excited 🎉

[@philipgerry5228]

We buy nice vehicles new and keep them for 10+ years. 😊

[@blade643]

Comparing a POS versa, least reliable car, vs a 65k BMW lol cmon guys

[@absolutelynonameslef]

This is insane to me. I've never had a car exceed 3.5% of gross income, and those payments seemed high to me. I couldn't fathom a $1k csr payment...unless I made $300-400k/yr.

[@Xspeedspec]

Now that don’t make sense….a house hold income of $200k+ is very easily done for a $1k car payment… $188k house hold income is very good to live…so meaning your life style is too expensive

[@Mr_NB628]

You chose a Nissan versa? I am staying nowhere close to a car where the parent brand is known for making cars that need transmissions replaced. I’m going to like a Camry or some kind of Ford sedan.

[@MoneyGuyShow]

The Versa was a placeholder because one of my team members has one and the price point worked. The case study was to put visuals with the numbers- unfortunately there are tons of comments on the placeholder choice 🤷‍♂️. Reminds me of my uncles yelling at each other and cracking jokes over Ford, GM, or Mopar on NASCAR Sundays.

[@mbag102]

What kind of ebook tablet is that? been looking for one

[@stephenpetersen354]

Looking forward to getting my Aptera. It's a little more but the solar charging negates all the fuel costs.

[@georgelane9738]

My personal rules for buying vehicles are: 1) No more than 20% of annual income 2) No more than 5% of total net worth 3) Pay cash

[@CLINTSTER77COX]

Can they finance a Nissan versa for 6 years? That’s the only way I can max out my Roth IRA for the next 3 years 😢

[@ramonajames610]

Caleb Hammer sent me.

[@miked412]

Easy answer to the question: I would rather drive the BMW. However, if you add in that I have to pay for the car.....just as easy - the Nissan.

[@freedomworks3976]

The trick to German cars is to buy them when 10 years old. They have 80% depreciation taken and the main bones of the cars are strong 💪 and can last forever.

[@reaper-sz5tm]

A 10 year old Mercedes won’t last forever without a big wallet. I’m a Mercedes mechanic.

[@freedomworks3976]

@@reaper-sz5tm are the newer ones that bad ??? I owned a German car shop years ago and they would last forever with a normal amount of maintenance. I own a rolex watch from 1953 ... pures like a kitten with a service every 5 years.

[@reaper-sz5tm]

@@freedomworks3976 Mercedes pre 1990 have been wonderful for me reliability wise. Anything after that is not my idea of a long term reliable car.

[@freedomworks3976]

@@reaper-sz5tm that is sad 😢…. At one time they were great cars. I have been hearing that they weren’t what they once were.

[@reaper-sz5tm]

@@freedomworks3976 I would suggest buying a Lexus or Honda product, at 10 years old they have much more life left with cheaper maintenance bills. If your very wealthy, drive a Mercedes and don’t worry. If your not, I advise Japanese products usually

[@metaltera86]

I would rather drive a paid for PT cruiser over any car payments period lmao

[@skryptec]

>buying a Chrysler vehicle NGMI

[@Qiuziarui]

U can buy a used model 3 with the tax credit for mid to high teens. Most average earners can easily save that entire amount in cash if they wanted

[@Itsanawfulwasteofspace]

I will never ever never pay $1k for a car! Did I say never? Lol.

[@jeremytam8219]

Until the Nissam Versa transmission blows up

[@tobymofield6597]

If you have a Car payment, You are considered BROKE.

[@thedude5040]

I have $1000 of car payments, but its between 2 cars

[@showtime4956]

No, this is Not a New Normal, absolutely Ridiculous…

[@Wwaywardaf]

EXTREME home makeover. They screwed over so many people.

[@michaelcaddell8520]

Tell the coworkers to ditch the versa, terrible cars with shit cvt transmissions that WILL fail. Go to Toyota, stay away from cvt.

[@28cthedestroyer]

Lol her 8% is $472, that's not really realistic to the average person

[@mikewsjames]

you guys should do one of these but about vacations and how much people are spending on those!!! I feel this is a underestimated opportunity cost most overlook

[@reaper-sz5tm]

Yeah my wife tried to say a $7,000 vacation once a year is normal on 150k income and I told her not a chance

[@Dividendsmattertoo]

@@reaper-sz5tmtell her let’s work on making our life’s a vacation

[@yeloautosports]

Vacations create experiences you can die with. A car is just a status symbol that satisfies only the owner

[@reaper-sz5tm]

@@yeloautosports wrong. Some of have cars as our passion. A vacation is just one of the most expensive weeks of your year.

[@yeloautosports]

@@reaper-sz5tm i get it. I have an NSX. When I die I personally will be more proud of the vacations I took than the NSX. To each their own

[@learning.finances]

That car example in the first 15 minutes of the show is mind blowing. I will try to share this video with my college students (I am a college professor). On a side note, thank you Brian and Bo for all you do helping the "little guy" (a.k.a., individual investor). I have learned so much from watching your shows. You guys are doing great work!

[@susanclaire901]

I test drove a Nissan Versa and it felt like it was going to fall apart around me. Toyotas for me.

[@MoneyGuyShow]

The Versa was a placeholder because one of my team members has one and the price point worked. The case study was to put visuals with the numbers- unfortunately there are tons of comments on the placeholder choice 🤷‍♂️. Reminds me of my uncles yelling at each other and cracking jokes over Ford, GM, or Mopar on NASCAR Sundays

[@MFlint-un2tq]

This was made just in time, I paid off my car 2 days ago. I plan on keeping my car for at least 8 to 10 additional years.

[@SuperBlooper057]

Nissan Versa is probably a bad example when it comes to saving money. Nissan famously cheaps out in order to have competitive sticker pricing, which leads to higher costs over time. The transmissions are incredibly notorious for giving out quickly. Spend the extra couple grand to get a Corolla and get both the nicer car and save money long-term.

[@RobWilliams007]

Not to mention the cost of an oil change, air filters, insurance, tires, etc.

[@carlgarrett5142]

I used to sell cars back in the mid 1990s. I sold an older Toyota Supra to a kid in his 20s who just had to have a badass sports car. Then he discovered how much more expensive parts and service were for it. Never mind what he must have had to pay for insurance.

[@hayleygb]

I loved this episode because I drive a 2012 Nissan Versa. My 30-some year old peers make fun of it once in a while. Jokes on them! :)

[@joseCalderon1976]

I'm married with two kids. My wife and I buy good used vehicles $10k or less. We're concentrating on paying off our house, which has a balance of $103k (we paid $170k in 2012). We're investing in our retirement accounts and to help out our kids. If we would have bought new cars in 2012, we wouldn't have been able to buy our modest 1556sq Sq ft home in San Antonio TX. And yes, we looked for the smallest house the builder had to offer back then. I prefer to drive older vehicles and live in a newer home 👍

[@spdog3344]

This is my favorite KZbin channel! Thanks for the great content guys!

[@RCRoads]

$1,000 car payment $600 for food and $800 utility bills. It's really tough on the retired and elderly. Honda's and Toyota's are good dependable cars but, men just like Audi, Porsche, big Ford or Dodge Pickups and or Corvettes. A very large percentage of people in my area drive $80,000 pickups and probably wright them off on their taxes. Best advice get a dependable car and don't buy a car to impress people because in the long run it really doesn't.

[@rossta3949]

I'm going to buy a car in the Versa price range, but Nissan makes junk cars with terrible transmissions. So I'm getting a Honda or Toyota. BMW makes overpriced junk that drops in value and is expensive to maintain.

[@MoneyGuyShow]

The Versa was a placeholder because one of my team members has one and the price point worked. The case study was to put visuals with the numbers- unfortunately there are tons of comments on the placeholder choice 🤷‍♂️. Reminds me of my uncles yelling at each other and cracking jokes over Ford, GM, or Mopar on NASCAR Sundays

[@carlgarrett5142]

Don't forget Subaru. Mine is almost 10 years old and never failed me.

[@Mr_NB628]

If you’re spending $60,000 because of a “bad day” you have way more issues than ego. It’s therapy time.

[@L4zyC47]

Last September, I had my car broke down. I finance a new Toyota Camry. 😢 had I knew about this 😭😭. Now I have $21k at 4.5% interest rate debt, and Im paying $700 per month for it.

[@reaper-sz5tm]

How long is your loan to have a $700 payment at 21k?

[@L4zyC47]

@@reaper-sz5tm at first, I took 5 years, which result in lower payment. I just pay $700 in hope to pay it off faster...i need to do investment more after paying off the debt. Had I learned about this earlier, I would have chosen cheaper car☹

[@kalebesseskew5525]

3years

[@abreh622]

Now Bo.. does this topic really excite you? Are you actually excited to talk about 1,000 dollar car payments. I’d be more depressed that we are talking about this instead of more,people following 20/3/8

[@Wavyyyaf]

FTE DANIEL!!!🔥🎉 cool stuff man!!

[@zx10rguyable]

There is a total fallacy with why the average car price is $50k and car payments are approaching $1000 a month. It's because people are just irresponsible. People have lost touch with what is a need versus a want. People want something shiny and new every 3 years or so because they get bored with the car or they think the car may all of a sudden fall apart when it crosses over 100k miles. One can get a brand Toyota Cross which would be more than adequate for most everyone out there. Base price of the Cross is $23,610. Assuming no down payment and 9% interest for a 5 year loan, you're looking at $490 a month for the car payment. Now bumping the price up to $30,000 to take into account options/trim levels and other miscellaneous to include taxes/registration, with the same loan terms, you're looking at $623 a month. It's total hog wash that there are no more affordable cars. It's because people are wanting more upscale cars with various bells and whistles and not buying affordable cars. Manufacturers are responding where the money is and focusing on what people are buying and eliminating the affordable cars in their line ups. People need to take a hard look in the mirror before complaining about their financial situation and affordability of cars.

[@taylorjackson7908]

Americans are good at financing everything!

[@wolffofcinema3448]

Car horn is a terrible podcast sound effect. Had me confused while I was driving down the road 😂

[@QuadNicole]

How do you determine if you should finance or pay cash on a vehicle? I am getting a vehicle and I can pay for it in cash (without touching my emergency fund) but I’m thinking of financing it 20/3/8 anyway so I have more flexibility in case I need the sum for something

[@TheFootbaldd]

Look at the amortization and decide if you want keep the cash and throw away the interest, or pay cash and save the monthly payment to replace that savings.

[@bobbert1945]

Our FICO scores, still excellent, are slowly slipping, and we think it's because we don't ever use credit these days. Our house, cars, etc. are all paid off. So my husband is thinking of buying a luxury car on credit, so that his credit score will go up. I think this is ridiculous--after all, you only need a good credit rating if you need credit, which we don't. I'm suggesting he compromise, and pay for his next car in cash--except for ~2K and pay that off over several years. Does this make sense at all?

[@DarthVader1899]

Banks in most cases want to finance a minimum of 10k. You only live once you can treat yourself once in a while.

[@slevitron1543]

There are 2 realistic ways to go about this Dave Ramsey promotes not having a credit score so you can close all your credit accounts and continue to live on a debit card / cash or you can keep your credit active the easiest way to do that without financing a luxury vehicle is just use credit cards. My wife and I use our credit cards for normal everyday expenses and they have all have autopays set to pay off the account balance in whole on due date. This way use gets reported every month, but you aren't paying interest or holding debt.

[@bobbert1945]

@@slevitron1543 We also use credit cards and pay them off every month.

[@KevinMDowney]

Buy high mileage Lexus/Toyota used cars and don’t finance unless you absolutely have to.

[@BagsNBaguettes_327]

Bought a brand new Lexus Rx350 for $55k in 2022 and put $41k down. Paid off the remaining balance in 6 months. I plan to drive the car until it falls apart. I despise car payments!

[@thurmansawyer2914]

Nice job! I like Lexus products and the owner satisfaction with them is quite high compared to other brands. We just bought our 3rd Lexus for cash. The first one we leased (RX 350). The second we financed. The third we paid cash. The third is by far the most satisfying as it is built in Japan, with a V6, a joy to drive and has no strings attached. Took a while for me to understand the pleasure of buying for cash outright but, wow, does it ever make sense, allow me to breathe easily and just enjoy MY car. The RX350 was our first Lexus. Congratulations to you! Having no car payments is one of the most liberating feelings!

[@johnwhite7927]

I agree with the idea of paying cash in principal, but the provided comparison is completely unrealistic. You deliberately chose an expensive larger luxury car and put it up against a notoriously cheaply made small car. Absolutely nobody that is looking at a BMW 5 series sized car can settle for a car as small as a versa. Even if you stay with the low quality Nissan for comparison, the appropriate comparison should have been a maxima. The price difference there is much much smaller. Again, I agree with your principals, but your comparisons are not even logical from a size perspective. Smaller is not always an option.

[@WaterDR-tw8re]

My wife and I do well. $500k in annual income. Never had a car payment over $500. My mortgage is $1200 a month.

[@spdog3344]

My Roth 401K plan has a low cost target retirement fund and a super low cost S&P 500 index fund. I recently switched from 100% into the target retirement index to 40% and put 60% into the S&P index fund. What do y’all mutants think? Good or bad idea?

[@spdog3344]

I’m 31 and plan to work until at least 60 years old, but more likely 62-65

[@joerozario4406]

@@spdog3344 Looks like you are doing a great job. Keep it up and do not deviate from your plan during many ups and downs of the market.

[@Strategies2010]

I’m 23 and in a similar situation with my traditional 401k contributions going toward a 2060 target fund, and Roth 401k contributions spread into Vanguard growth funds. I was talking to a Fidelity advisor today about it, and it seems like it’s mostly up to your risk tolerance and time frame. I’d personally switch any target funds into heavy growth funds (S&P500, NASDAQ even) since you’re young and can handle the risk/volatility. The benefit of target funds is that they’re automatically rebalanced by the managers as they get closer, so that may be one benefit to you (not having to rebalance your heavy growth portfolio as you get closer to retirement).

[@Strategies2010]

Cost is also a part of that - if there’s a significant difference between the index fund and the target date one, look at how much the operating costs are 😊

[@Ww8.3]

I paid off my Tacoma. Best decision ever

[@l.h.tnguyen4916]

If you have ever driven a Nissan Versa then you would know its better to walk. My God it's such a crappy vehicle.

[@tschm4185]

Hey Guys, love the show. Could you do a similar show comparing two home purchases?

[@stephen6156]

Messy middle Millennials unite.

[@lonz0_0]

Does the dollar amount really matter if it still fits in 20/3/8 though?

[@InvalidFingerprint]

Dave Ramsey recommends not having "anything with motors" totaling in value greater than half your annual income (e.g., if you make 50k/yr, then you shouldn't own cars/bikes/boats that total more than 25k). I don't know if The Money Guy Show has an explicit rule about this, but I definitely remember them mentioning Dave's rule and agreeing with it.

[@alexpietsch7997]

8% of your take home pay. You telling me you're bringing home 12,500 net every month and you can't find a car you can pay up front on?

[@lonz0_0]

@@alexpietsch7997 I agree, I just wanted to point out the dollar amount isn't the problem, but the percentage of your income is.

[@alexpietsch7997]

@@lonz0_0 Irrelevant in this situation. Debt is a bridge to get you where you currently can't be. 20/3/8 becomes a bridge to nowhere if you're trying to buy a car on payments when you're making 150k a year.

[@packaok]

We have not had a car payment since 2003. Save up and pay cash for things you purchase, especially those that go down in value. If you can’t buy it, then you cannot afford it. Oh, and as a result of not having consumer or car debt, we just paid off our mortgage last month. No payments in the world and loving life!

[@thoryan3057]

No payments? What about the infinite real estate taxes debt that you can never pay off? Being "debt free" only means you are free from certain obligations. But unless you can avoid paying real estate taxes, Internet bills, and utility bills, you will NEVER be free from obligations, ever. Hope paying off that low interest mortgage under the illusion of being free from obligations was worth it to you.

[@packaok]

@@thoryan3057 Absolutely, there will always be bills. Those are mostly discretionary and are for services rendered (streaming services, high speed internet, games, movies, etc.) Some are necessary to live like food and electricity, and must be paid by everyone regardless of how much debt they have. Some are outright theft like the governmental seizure of private assets in the form of taxes. Property taxes are double taxation and morally wrong, but they are the cost of doing business, so to speak. I live in a very nice rural area and my property taxes are very reasonable (if there is such a thing). Debt is slavery. The Bible says that the borrower is slave to the lender. Not having debt brings a peace and freedom to your life in many ways that you may not have considered. You go into work on Monday and your boss starts yapping at you. You can turn around and walk out if you wish. You don’t need to stay in a job you hate just because you have a car payment or a house payment. If you have debt payments, your stuff owns you. You don’t own it.

[@hullihenfamily829]

It means he isnt throwing away his money on interest and only has to pay for fixed expenses. Lots of those fixed expenses he has control on minimizing also. The average house payment is around 2200 a month. that takes about $800k in a 401k more to pay for that. paid off house is $800k less you need in your retirement account@@thoryan3057

[@BrookieCookie]

If you already bought your car and didn't know about the 3-year rule should you try to pay it off early even if you have a 3.5% interest rate?

[@Mr_Banker222]

If it ain’t 0% pay it off asap

[@Fish_Pig]

When everybody says "keep payments less than X% of monthly income" are they saying gross or net income. I have a feeling they mean gross because that's what is easily calculated because everybody knows their salary gross number is but not their after tax and savings net number. I find it annoying because you don't pay your bills with the gross amount. You pay your bills with net amount. 8% of gross $8000 is $640 car payment, but 8% of $5600 (after you lose say 30% to federal, state, ssi, medicare taxes) is $448 car payment. In addition, the shorter your financing period the higher the monthly payment will be. I don't know that a family of 6 could find a big enough car for $448 a month for 3 years in this economy.

[@TwiztidPixiel]

My paid off car kept overheating (2014 chevy cruze). Tried to make it to 200k miles but it died at 187k..lasted 9 years . So I finally bought a newer car. It's a 2018 Nissan murano I got for $18000 did $1000 down. Definitely worth it for me.

[@jirehguy]

Nissan versa’s suck. Wouldn’t recommend anything with a cvt transmission. They always break down prematurely

[@MoneyGuyShow]

The Versa was a placeholder because one of my team members has one and the price point worked. The case study was to put visuals with the numbers- unfortunately there are tons of comments on the placeholder choice 🤷‍♂️. Reminds me of my uncles yelling at each other and cracking jokes over Ford, GM, or Mopar on NASCAR Sundays

[@tomdriscoll7041]

Love your show, you guys are completely correct on the pricing of vehicles, but to some people cars are just more than transportation to get to point A to point B so there is always gonna be a sacrifice of money being spent. .. on a much higher quality vehicle. if you're world revolves around investing and becoming personally wealthy..you should definitely stay away from expensive vehicles...

[@RobWilliams007]

I have a 10 1/2 year old Kia Optima. Bought my wife a 2018 Subaru about 1 1/2 years ago - payment is $325. Had to get rid of her 16 year old 4 Runner that was dying - but got $3,500 for the 4Runner. We can afford a $1,000 car payment but can’t go there.

[@pilotoblackbird433]

Lol my girlfriend bought the 2022 Nissan Versa. It’s a good little car. 40+ miles to the gallon and apple car play and android auto.

[@jasonhobbs2405]

ETFs are more tax efficient than mutual funds. The only benefits of mutual funds over ETFs are behavioral.

[@Josiah_Cornett]

My grandpa worked at Ford for many years, so I can buy a new Ford at 0% interest and at a discount. The problem is, new cars are so expensive! The cheapest car Ford sells is the Escape and it STARTS at $28,000. Probably would end up being around $32,000 or so after adding a few, not crazy, things.. I could do 20/3/8 on it, but since it’s 0% interest, is it wise to do a longer duration loan and invest the difference?

[@Josiah_Cornett]

Side note, my wife and I make a combined gross income of over $120,000 and are investing at 10% while we pay our student loans (after, we will up to closer to 20-25%). Our “needs” budget category is under 50% of our income, even including student loans.

[@TPAsses]

You are limiting yourself looking at fords that depreciate like a rock.

[@mustymonster9877]

Another great show guys! I love listening to y’all while I clean around the apartment. Always great to listen and reapply myself into these conversations! 👍

[@shaneminer15]

I'd push back on the idea that there aren't inexpensive, reliable, used cars. I've never paid more than 12k for a car, and I've never bought a bad car. all of them have been reliable.

[@hillfortherstudios2757]

Agreed bud! People don't believe me that a sub 12k car will last.

[@hockeyhalod]

It just takes buying one used car that wasn't vetted properly to never buy a used car again.

[@lelandbuerman4025]

I bought a 2012 used car with 107 miles on it with a recently replaced engine with 70k on it in May of 2022 for $9,600. Since then, I have invested over 10k into it - often $1,000-$1,500 for each surprise repair (each time thinking it was worth it. But it still needs work and at this point I am just done with used. Yesterday I put money down on a brand new 2024 Toyota Camry because I just can’t do it anymore. I just need a reliable transportation payment that I can build a budget around.

[@sd0753]

My car payment has been between 5-10k but i only make one payment

[@Laz_RS]

I wouldn't drive either of those cars. Can I have a third option?

[@bbwbell85]

Why do you base it off of Gross income VS Net?

[@saibtsheb5590]

Love the Nissan Versa 😂

[@michaelb.8953]

That 8% figure is that before or after taxes?

[@vijayvarghese1652]

would the 20/3/8 rule apply to luxury vehicles if $1000 is less than 8% of my gross monthly income? (i currently drive a 2003 lexus with 205k miles on it that I paid off years ago)

[@jeffreydavison8031]

I bought a new Lexus RX330 in 2005. 123,000 miles runs great.

[@physicslawyer9845]

I like cars. I am frugal in every other area. We make 300k/yr. I do have a 1k/month for 60 months because the loan was less than what a CD is paying, so I didn't think it made sense to pay cash. We have a few million net worth. What is wrong here?

[@kellanhills1972]

What’s wrong? You are not allowed to enjoy your money on this forum.

[@physicslawyer9845]

​@@kellanhills1972😂

[@roburb73]

Yup, it sure is the norm! lol. I pay $1,407 for one vehicle and $728 for the other :) Both interest rates are below 2.25%. I follow most of your rules, but this one I will never align with :) However, both of our cars are 8% of our income but our mortgage is only 6.5% of our gross income and that is SIGNIFICANTLY less than what any finance folks recommend. We're fixed for 30 years at 2.25% and have no reason to sell the house now. Add on to the house has doubled in value from $390k when we built it to $760k today, with the highest value at $850k, We also invest 30% of our income, so we invest 3/4x what our cars cost. It doesn't work for everyone, but it works fine for us. I drive a '22 BMW X3M Competition and my wife drives a '22 Toyota TRD 4-Runner. I don't care about impressing people, I also have a 100k mile Jeep that doesn't impress anyone. I understand the math but I also enjoy driving my BMW on the weekends and when the weather is perfect! I will stick with having a car payment, doesn't "hurt" our ability to invest.

[@oboe23able]

You must be making disgusting $$$ for those % to be accurate lol. Do what you want.

[@roburb73]

@@oboe23able We make great money, yes. The mortgage is based on several factors, one of them me being a disabled veteran and Utah giving a property tax abatement which reduces my tax to $0. The other was pure luck and I had my house built at the right time and was lucky enough to get a refinance done when the rates were historically low. I also was given a no-fee refinance based on the amount of customers I referred to this broker.

[@chetanjilhewar1669]

Wow, I thought 6 or 7 years was bad to pay for the car loan. How long is your car loan?

[@roburb73]

@@chetanjilhewar1669 60 months. I bought the car when the interest rate was low so it's not bad.

[@powers7892]

What you think about the 40 year mortgage

[@gabrielleolivia1]

We bought a Tesla, our payment is 600 something. BUT, we share the car, we have always only had one car since we’ve been married. Also, we have Tesla energy at our house which not only was .03 cheaper per kilowatt than the last company but also gives us free charging at home. So we pay nothing to make our car go. Lots of wins there and we’re very happy with our choice. Oh and our household income is 6 figures. Teslas are definitely luxury purchases but a more reasonable one to me.

[@Joenzinator]

We are in the top 1-2% of income earners. I drive an 8 year old minivan, and my wife drives a new "average" $50,000 SUV, which I thought was a lot of money even though we paid cash for it. When I see average, young Americans spending $100K+ on cars, I'm very concerned with their financial planning.