The Reason You Won't Retire? Your Car.

How much did you pay for your last vehicle?
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[@drbcrb]

Prices of vehicles have increased at unreasonable rates. Even car people recognize this. I drive a 2012 model. As long as it is safe to drive I have no plans to replace it.

[@233kosta]

Prices of everything have increased at unreasonable rates. We call it devaluing the currency. Blame your friendly neighbourhood central bank. And cheap credit!

[@NicConstitution]

Hey Erin! Great video. I have NEVER purchased a new vehicle, and I said back in my 20s that I never would. I'm in my 50s now and I have no regrets about never having had a brand new car. I buy respectable, dependable, used cars and they usually last me five or six years on average. I think the most I've ever paid for a car was about $20K, and that was for a good, safe car for my wife to drive in our Michigan winters. I simply can't imagine spending $50K on something that will lose so much value on day one.

[@Iffy50]

What vehicle did you buy for $20K for your Michigan winter?

[@NicConstitution]

@@Iffy50 It is a 2014 Ford Edge (AWD) that we bought used a few years ago. I believe it had about 30K miles on it, and it handles our Michigan winters (with plenty of lake effect snow in the northern lower peninsula) very well.

[@NicConstitution]

@Brandon Busby Yes, unfortunately we (mostly I) have to travel far more than the average, so the journey to 200K+ miles is a quick one for us.

[@Iffy50]

@Nic1701 Constitution seems like a good choice. I went to school in Houghton and now I live in Duluth, MN. Lots of snow here too.

[@karlabritfeld7104]

These kids have no money for a house. Instead they drive a car that could be a house payment.

[@Collador19]

I own a financial planning company and find vehicle payments to be consistently high on the cash-flow sheet. At retirement I am planning on writing the "10 Things I learned as an Advisor" pamphlet, and spending on vehicles and phones are going to be one of the items I discuss.

[@johannesswillery7855]

No one talks about the money people are spending on phones. Great point!

[@letschatfamilyfinances]

Great video! I am honestly shocked at what people are willing to spend on cars! We have been able to build incredible wealth over the last 20 years by buying reasonably priced cars in cash (mix of new and used) and driving them for 10+ years. My husband makes over $200k and I cannot fathom even paying close to the "average new car price" for a car! We get where we need to go in our older cars and are at great peace knowing we are building wealth rather than drowning in debt. A trade-off I am more than happy to make! :)

[@ErinTalksMoney]

Love this!!!

[@dstevens518]

Great post. We have a couple cars that are about 10 years old. Both our cars added together don't reach the average price of a new car. I expect we'll drive them another decade. $50K for a car? It just gets me from A to B right? Wow, no thanks.

[@droid2D2C3P0]

I bought my first car just after my 27th birthday last fall after years of walking, public transit, or borrowing my mom's. I got a used 2015 Rav4 for 20k CAD (just under 15k USD) in cash and I have no regrets. It's well within what I can afford on my salary and not having payments is amazing. I cringe hearing my friends talk about their payments and talking about upgrading only 2-3 years after getting a brand new car. I'm hoping to keep this one until at least 2030 (unless it's still running great then I'll keep it as long as I can) and then I'll find another used Rav4 for ~20k again in cash and repeat. I have no desire to own a new car, in fact if I had any car/mechanic skills I would go older, and will never understand the hype around new/luxury cars or heavily financed cars!

[@donh8833]

There is a massive build up of inventory on dealer lots. Higher interest rates combined with loss of stimulus money, the result is demand has plummeted and so have prices. Dealers are used to the fat margins, and are resisting lowering prices. But a hungry stomach out does pride and greed. BTW: I only purchase very run of the mill Taurus, Camry, or Accord USED. And I run them for over 15 years typically. I pay only cash.

[@ehderguyyashootadeerorno2313]

We never have more than one car payment at a time. Car 1 (wife) we buy new/almost new take out a 72 month loan and pay it off in 2-4 years. Then we buy another vehicle (Mine), we trade in my old one paid off in full,, plus a check, finance over 72 and pay it off in 2-4 years. We do this so if we lose a job, we can drop down to 1 vehicle payment at 300-400 per month. We buy mid vehicles.

[@vistahawk1688]

In 2003 we paid $28,000 total for our new Honda Pilot. Now, It only has 123,000 miles as we both worked from home for 15+ years. Still works great for me as I take it on long trips to the desert carrying my motocross bike. I also sleep in the car when on motorcycle trips as it has lots of space and protects well from the elements.

[@ErinTalksMoney]

I think working from home is the secret to making a car last 😂 at least that's the approach I'm using

[@MrTopnotch2]

Back in 2017. I bought a 2014 Nissan Versa Note for 14K. Only had 15K miles on it too. With the cost of cars today, I'm hoping my car holds up for a few more years because these car prices are outrageous. Loved the video Erin!

[@famicomnintendo]

Maintenance is key

[@Rick-of6gx]

Specially the cvt fluid, if you got cvt.

[@KrustyKlown]

You can still buy below avg mileage (low mileage), 2-3yr old sedans for under $20 that get 30-40mpg.

[@berg8970]

Even if you pay to rebuild the engine, transmission, and brake system you would still come out ahead financially.

[@aaronjosephs2560]

We went down to one car about a year and a half ago, and it was SUCH a great decision. The occasional inconvenience is so, so worth it

[@bradtrades]

We did the same, and in about the last two years one of us has had to use Uber twice I think. Compared to the cost of a second car, WAY worth it. Plus I love the extra room in the garage.

[@aaronjosephs2560]

@@bradtrades agreed completely! After living with one, we would even consider no car if we lived in a city with great public transportation. We'll probably never have two again.

[@hogroamer260]

A motorcycle or even an ebike can fill a lot of the gaps too. Well, helps I'm in Florida.

[@aaronjosephs2560]

@@hogroamer260 I'm in Minnesota, so there's a good chunk of the year when being exposed to the elements is pretty brutal

[@hogroamer260]

@@aaronjosephs2560 I grew up in the snow belt in NY, 200"+ snow (probably 12" of salt!). Who wants to go out in winter anyway!

[@dstevens518]

This video, of all your videos, probably has the most impact for helping folks toward a successful retirement. Cars kill, not just on the road, but your retirement dreams too.. Avoid them if possible, minimize their cost if owning a car is necessary. Every country in the world aspires to an automotive manufacturing sector, as it's a HUGE economic boom for them. When I was a kid, I could name all the cars that drove by my house. Now, I can barely name all the manufacturers, let alone all their models. People waste more money on cars than anything else in their lives. And I LOVE cars! But I love my old self more....

[@TrucksAndStuff55]

$7k for my 13 Jetta in 2019 w/ 50k miles. I try to get the lowest priced car with around 50k mile whenever I buy a car. I was actually a car salesman at one time and nothing burns you on buying new cars like seeing people rollover debt from their underwater trade-in over and over again. It’s a tough cycle.

[@tbayhell2304]

Lowest priced used car also means higher risk of underlying problems that will offset the cost savings for a market priced used car.

[@berg8970]

@@tbayhell2304 I would like to introduce you to my now 20 year old car that I bought when it was 2 years old for $7,000 cash and only had 8,000 on the odometer. My other car is 15 years old, I paid $4,000 cash for it but its value was north of $12,000+ at the time. Lower price doesn't necessarily reflect higher risk. Like everything else, if you educate yourself before buying or doing something you most often will come out ahead.

[@educatedwanderer9293]

I ran my Ford Fiesta for 300k miles over about 10 years. I put a lot of miles on my cars. I now have a Ford Escape that I bought used 3 years old and I plan to drive it 300k miles.

[@ec5657]

I bought a brand new Toyota RAV4 back in 2015 for $26k with a 0% interest rate and paid it off a few years ago. I can't believe how expensive cars are now! My car is in great condition and has low miles (work from home mostly these days) so there's no way I'll be buying a new car until I absolutely have to!

[@jip230]

I bought a 2014 New Prius. I paid $28K. I had 0% down and paid on it for five years. I still have it and the car doesn't even have 65K miles yet. I plan to keep it another five years until 100K and the 'big prius' battery going out becomes a real concern. I can't believe people are taking 72 month loans - even 84 month loans! There are some lux cars that are nearly six figures. I really hope I can keep my Prius another five years - my plan is to buy my next car cash. But I plan to keep all cars forever from here on out b/c new car prices aren't anywhere near reasonable anymore

[@michaelb.8953]

I bought a brand new Toyota Rav4 in 2018 and put nothing down financing 100% of the vehicle including taxes into a 7 year loan coming in at almost $31,000. I'm paying it off super early making my last payment here in three days of which took me just slightly over four years to wrap it up with 65,000 miles. When I bought the Rav I was also paying another car payment at the same time on a brand new 2016 Toyota Corolla that has been paid off for the last 3 years and now has 111,000 miles on it, but still drives and runs exactly like the day I drove it off the lot with 1 mile on the odometer. Needless to say I'm sick and tired of car payments and will now enjoy two relatively newer paid for cars in my garage, and they are Toyota of which you can't get much more of a reliable vehicle as they should last me many more years.

[@fandoms5ever]

I bought a used 2010 RAV4 in 2015 for 10k and it’s still going strong today - no issues besides standard maintenance. It’s a great car!

[@berg8970]

For $40,000 I could renovate every part of an older car and still have a bucket of cash left over. I have two cars one is 20 years old the other is 15 years old. I am completely debt free and enjoy every minute of it.

[@kevinmcnally3811]

Great video Erin. A couple years ago I bought a new Tundra 4x4 and paid cash that we saved up. Last year my wife bought a new 4Runner using an auto loan (3 yrs at 2.38%) but I have been tripling up on payments to get it paid off in 1 year. Both were around $50,000 plus or minus, but this is a unique situation for us because we wanted to pay off new vehicles that would last a long time before I retire later this year.

[@kingcrab750]

Why not play the arbitrage game, put the cash in CD or treasurery bill/note earning north of 5%? You'll be making money.

[@kevinmcnally3811]

@@kingcrab750 Yes, that's what I did. I had the cash to pay it off, but put it in I-Bonds and CDs making more than the interest rate on the car. But I am still paying it off quickly because I don't want to have any debt when I retire.

[@locoesesapito]

Blame the manufacturers playing into people's fears and getting them to buy SUVs. Higher price, worse gas mileage than any same-year sedan, and higher insurance cost.

[@fauxbro1983]

Lol. They've rented putting a gun to people's heads. The average person sees 10000 ads per day. Think about that

[@user-tb7rn1il3q]

Most people are buying CUVs not SUVs. They are basically tall wagons with great safety records, low insurance, and are very fuel efficient. Sedans are basically useless for transporting large items. A CUV even though it may have a higher purchase cost will depreciate much less than a sedan.

[@user-tb7rn1il3q]

@@lifesabeach5405 A Highlander is a Crossover Utility Vehicle which is much safer than a Camry.

[@p1lowboy]

Look into C.A.F.E. standards. it's not consumers.

[@timothygibney159]

​@@user-tb7rn1il3q Citation?

[@markc7575]

Most expensive car I've owned was about around $40k and financed...dumbest mistake I've made. The current cars we have are used and were paid with cash. I haven't had an auto loan since 2016 and it will stay that way.

[@davidblack6413]

I've never owned a car, and am in my late 50s. (I appreciate that this choice is not available to everyone, so no judgment intended.) It's not something I planned to do, but years of living on little while pursuing graduate studies conditioned me to keep life simple. As North American society remains organized around private transport, and though I came from a town likely smaller than Erin's -- no "pickle bus" in my village of 1500 -- as I moved to cities for education and work, not having a car grew to be liberating. It has saved me a lot of $, most of which I invested, and also taught me a certain amount of patience and perspective. Whether it's a bicycle or, most often for me, a bus, I do get where I'm going a little slower than those who drive, but enjoy some exercise or free up some time to read or plan my day as the bike or bus gets me to where I'm going. Not owning a car, while certainly not a choice open to all, is really the most cost-saving thing a person can do.

[@enjoyslearningandtravel7957]

Also if you have a choice not to own a car and there’s more public transport in the city, you live, you tend to get more exercise, just by , walking to the bus, stop or bicycling and that tends to make you more fit and healthy without trying, or in paying the extra money to go to the gym.

[@ajk9909]

What cities did you live in to be able to do this? If you don't mind me asking.

[@KrustyKlown]

Doesn't living in a city that enables living without a car .. include additional expenses, like high rent (ownership not affordable), eating out more often, paying for public transport, shopping at high priced local grocery stores, etc... But if that City is where you REALLY want to live no matter what.. then yes, not having a car is a money saver.

[@enjoyslearningandtravel7957]

@@KrustyKlown actually living in a city where you don’t need a car does not mean you have to eat out in more expensive places plus you can often make something at home that’s less expensive and more healthy

[@enjoyslearningandtravel7957]

@@KrustyKlown yes often living in the city, where you don’t need to have a car is more expensive to rent a place or buy a place but often it makes it less for the same price. If you total the price, the car would cost you per month for your loan plus the insurance plus the gas plus the oil plus the title plus inspection plus the new tires, repairs plus parking, etc. soften the same price for the more expensive apartment where to buy a condominium the house. Of course, this choice is not for everyone

[@donjohnson3701]

The biggest mistake people make is going in to the dealer and asking what the payment is instead of the total out the door price of the car. I only buy used cars (US or Japan) that have depreciated to less than half their sales price. The “old” rule of thumb was don’t buy a car over 20% of your income. So if your are making $150k that would be $30k for a car. A car is a rapidly depreciating asset that gets you to work and back. Learn to take care of the car; routine maintenance done by yourself will save hundreds of dollars. An older car will be easier to find parts for in a junkyard. I have a 20 year old van that has only been into the shop for a recall-the other maintenance such as brakes, fluid changes, tuneups, etc. have been done in my garage.

[@toskin6395]

I resemble this topic. We’ve been able to retire for quite a while, but the two reasons we keep working: Medical insurance The ability to buy any car we think is cool We followed a strict budget and invested a ton in equities and real estate when we were young, so we would have some latitude later. Some people party, some people travel, some people buy cars. Shuffling around the house in your 80s waiting for your kids to call will come faster than you think, whether you had fun or not. So have as much fun as you can.

[@hogroamer260]

There are creative options to health insurance. You want to retire, retire!

[@thegameexplainer3861]

I recently accepted a buyout offer from my employer, so I'll soon be in early retirement. When I exit I'll have to turn in my company vehicle, so I went vehicle shopping. I found a 2021 Blazer LT with less than 5K miles for under $30K. So many "Covid lease" vehicles are getting turned in early due to high demand for used vehicles, it's getting easier to find nearly-new vehicles at a price that's a lot less than brand new. I paid cash to avoid adding debt entering retirement. My wife's vehicle is paid off too. We plan to keep these vehicles for many years.

[@1175drh]

Bottom line, if you want to succeed either pay cash, or no longer than a 36month loan with 20% down. Dave Ramsey says no more than 50% of your yearly house hold income all things with Motors, or wheels. That hits pretty close to your 35% on a car. No need to pay 50k on a vehicle. Nothing wrong with a used Toyota or Honda. The #1 car brand that millionaires drive are Toyotas. Broke people love BMW's ... We have a net worth of 1.3mil and have a 2011 F150 and a 2018 Hyundai Sonata both paid for. I hate driving vehicles with payments Great Video Erin!!

[@ErinTalksMoney]

Thanks David!

[@mmoye8640]

We stopped purchasing new cars years ago! Not a good practice to buy new. All cars we have purchased have been under 30k.

[@ErinTalksMoney]

Thanks for sharing

[@hogroamer260]

2018 Silverado Custom, club cab, 4WD - paid $37k. Still like brand new with 40k miles and current value is not much less than what I paid. No way I would buy a car, or house for that matter, since Covid. Previous vehicle was a 2005 Pontiac Grand Prix which I kept for 11 years and 200k+ miles. Automobiles are the biggest waste of money. Why would anyone be impressed by one? Buy what you need and keep it as long as you can.

[@bigdave5946]

We bought a Toyota Camry in 2020 for just over 30k . It was before car prices went crazy . We had been saving as part of retirement plan . So we we able to pay cash . We figure the car will probably outlast us because we’ve had very good luck with Toyota’s in the past and we don’t drive nearly as many miles . I really recommend paying cash when you can . With no car payment or mortgage it really allows your retirement funds stretch farther. As the matter of fact we are able to save money even in these crazy times . So we use some the money to update our house. Our life is very stress free because of our planning.

[@scottg2946]

Great video Erin! I'm a bonifide "car guy," and I really like all sorts of cars, but they can be a total financial albatross.

[@JohnPMiller]

If you buy a used sports car, it can be either well-maintained and babied, or poorly maintained and abused. I used to have a Mazda Miata and a Porsche 944 that were owned by older drivers who kept them like new. Both cars were very reliable and cheap to maintain. This was back in the late 1990's, so today parts would be expensive.

[@233kosta]

Whenever I'm forced to not be on my motorbike (i.e. unpleasant weather or too much cargo), I drive a mid-'90s Toyota. Paid a grand total of £300 for 'er. She ain't fast, and kinda rolls & understeers, but the throttle responce is way better than anything sold today, there are no ridiculous distractions inside and every important control has its own button you can find without taking your eyes off the road.

[@justinofboulder]

Great topic! While I dream of living a car free life, as a tile installer owning a truck is a must until I retire! My first vehicle cost $5000, I drove it for 100K miles and sold it for $3000. My second vehicle was $5000, I drove it for 120K miles and sold it for $1000. My third vehicle was $5000, drove it for 65K miles and sold it for $4000. My fourth vehicle cost $10000, I drove it 85K miles and sold it for $8500. My fifth vehicle cost $4000, I put 85K miles on it and sold it for $3500. My sixth vehicle cost $16000 and I have put 120K miles on it so far (still own it). My seventh vehicle cost $10,500 (was discounted $8500 due to severe hail damage) and have put 55K miles on it so far. Seven vehicles in 34 years of driving, always paid cash and spend an average of $600 per year on maintenance.

[@patrickprendergast9589]

please whot kind of cars

[@justinofboulder]

@@patrickprendergast9589 1988 Honda Accord LX, 1988 Honda Accord EX, 1998 Honda CRV, 2000 Honda CRV, 1991 Honda CRX SI, 2001 Toyota Tundra, 2016 Honda Fit LX. I still have the Tundra (for work) and the Fit.

[@patrickprendergast9589]

@@justinofboulder thank u j that is priceless information to me j

[@victormorrison441]

Appreciate the link to the article and great content

[@coreylee9504]

Cars became one of my hobbies in the past 5 years partially because I needed a hobby, partially because it was a practical choice to learn about something that can also help me save a lot money while having fun doing it. I still have a lot of enthusiasm for great cars, whether they're off-road capable rigs or sleek well-handling sports sedans with 0-60 times (if that matters to you, fun matters more to me). Even among the car enthusiasts, it's generally agreed that average car prices are absurd. Yes, you will see absurd prices for high end cars like the RS6 Avant ($120-130k to start) or the Porsche 911 GT3 (north of $220k). But plenty of car guys know cars well enough to understand how financially harmful depreciation can be. And a lot of guys aren't too excited about the idea of dropping 40k on a well-equipped Toyota Camry. You really need to ask yourself - is that new car smell worth $10-15,000? Do you really want to impress all those people who will be wowed by your new car for a grand total of 10 minutes? I love cars, but I love the feeling of being financially secure even more. I won't lie though - it's awfully tempting when I see a really nice car. My trick is to give myself about a week to think it over. By that time, the luster has faded, and I'm back to being more sensible. One more thing people should know - it costs a lot of money to get your hands on the newest tech. The problem with the newest tech in cars is that it fails a lot and has a lot of kinks to work out. Do yourself a favor - wait a few years and let the industry sort that stuff out and you'll get a used car with more reliable technology that you won't be pulling your hair out over. And it tends to be cheaper.

[@bradtrades]

Excellent video. And 15 years and counting on your car Erin, I'd bet you bought a quality Japanese vehicle, not German or American. My wife and I now just have one relatively new Honda, and I sold a 14- year old Acura for a ton of money a few years ago when used car prices were crazy, and we haven't missed it. By working at home, we're able to live like retirees before our time.

[@KrustyKlown]

YES to working from home full time !!! A big money saver. Started that with the pandemic.. ain't going back to a silly office.. .such a huge waste of MY money, and my employers money (they just haven't figured that out yet). For years I found it absurd to travel to an office, to use a computer there for Zoom / Teams online meetings ... when I could do that from home. America developed all this remote working tech, and corporate America has been a dinosaur in adopting & leveraging the cost savings of such tech.

[@bradleyvanzile1111]

I paid $22000 cash for a 2008 Honda Civic 112 thousand miles. Never had a car payment!

[@MTtroutfisher406]

Great video - I think the danger of a line item in the budget for a car payment is the very problem. If a person has debt of any kind, they shouldn’t have a car payment because they clearly can’t afford it. Buy a cheap car with cash, carpool, move closer to work or ride a bike. By carrying debt you’re spending money you don’t have. That’s what I did and it’s helped me retire by 48. It works folks.

[@dstevens518]

Beat Freedom 55 by SEVEN years! Impressive, hats off to you, well done. Enjoy the fishing 🙂

[@cashflow68]

Im all dough, no show. I still drive my 2008 Honda Civic which I bought new. To me its reliable and its get me from A to B. I can park it anywhere and its simple to fix. It still looks good and Im not here to impress people. BTW, I fully retired financially free at 56. I"m also a t shirt and jeans guy. I blend right in with other people. Healthy and Happy.

[@jonmeilstrup5419]

Great video, and very timely advice for us--we're in the process of looking to get my daughter her first car after she graduated college. So these are definitely things we'll be talking through with her, especially when deciding how much to spend on the car. Thanks, and keep up the great content.

[@keekee8760]

Great video, thank you for sharing.

[@waynehaff2625]

The other problem with car loans over 4years , you will most likely have additional maintenance costs while still paying for your car loan: tires, brakes etc. also more risk for big repairs unless you have extended warranties to cover big repairs ( warranties do not cover wear items ) of course warrantys is another added expense.

[@user-tb7rn1il3q]

Cars are more reliable nowadays. It’s not something to worry that much about. Extended Warranties are a waste of money.

[@traywaters1575]

Really love this channel! Keeps me accountable on my weekly financial decisions too😂

[@MrPizzaman09]

I'm a huge car fanatic. I split 3 daily drivers with my brother. Over 10 years, we've bought 4 cars, all used. They are all rare, exciting cars, but in total we've spent $63k and have sold 2 of them for $29k, so a net of $34k. In total we've put on about 300k miles, which include racing 3 of them and winter driving that is very hard on the cars. I like to calculate the cost of the cars in terms of $/mile. My most expensive car was $0.72/mile and some of the cheaper ones have been about $0.25-0.40/mile (all costs included + insurance). It amazing me to see people spend $1+/mile on new cars b/c of the huge amount of depreciation.

[@xaldath4265]

I think this is a reasonable way to look at it. Also, when vehicles are used for additional purposed beyond "point A to Point B" transportation, that matters. When you have a passion for something, that shouldn't be ignored. The problem is many people don't think this way. They *think* they have to spend all sorts of money for the prestige of a certain brand or class of vehicle when in reality it's probably more than a meaningful difference on cost for less than meaningful value gained.

[@KrustyKlown]

There are somewhat Exotic cars that appreciate in price, and usually always have extremely low mileage. One can buy, drive and sell such cars to realize a lower cost of ownership per mile MUCH lower than many plain averge not exciting new cars. For example, I bought a 911 Turbo several years ago for the avg going price, for less than the cost of the avg new car .. that car has almost double in value since I bought it ... while the avg new car would have depreciated a good 60-70%.

[@iittlebit3539]

I bought a two year old Toyota with less than 8,000 miles. I plan to keep the car until the wheels fall off. Thanks for all your help Erin

[@timwalter6795]

New to your channel but loving it so far.

[@ErinTalksMoney]

Welcome to the channel!! 🙏

[@brijeshkukreja7411]

Traded in my 1997 Honda accord and bought a new camry in 2017 $22,000 and holding it since then. No intention of changing or selling.

[@guitargod66]

Such a great video. Couldn’t agree more. I’ve always thought people were insane buying new cars. Even now, I feel like to spend more than $15,000 on a car is in unnecessarily expensive decision. I mean no offense by that. A car is a method of transportation. You need it to make it from point a to point b without breaking. It is such a great source of draining a bank account. I drive a 156k mile 2007 Chrysler 300C that I bought for $6000. That was an upgrade from a $1450 2007 Crown Vic police interceptor I was driving, which i sold for $4000. Before that car I owned a 2004 Crown Vic which was totaled but I got my money back. I’ve had some trucks, too. Most of which I’ve made money with or broke even on. I’ve flipped other cars too, so in general,automobiles have actually made me money or allowed me to heavily mitigate that expense that millions of people are draining their bank accounts over. The worst part of all of it is how unreliable some of the new stuff is, too. Those $100,000 Escalades eat lifters in the engine or just destroy the engine all together. Engines are on backorder for a year. So you’re paying a grand a month just for the loan, for a car you can’t even drive for an entire year. There are tons of cases of those backordered engines finally arriving, only to be bad right out of the box. So another engine gets ordered and you keep waiting. Cars built in the early to mid 2000s are some of the best cars that will ever have been made, reliability wise. I’d only go with a Honda or Toyota these days. We have a 2016 Accord and with 170k on it, it has a lot of life left. It could eat an engine or trans at this point and I wouldn’t care. It would be worth fixing and we’d just carry on. If I was going to spend $20,000 on a car though, I’d for sure buy a newer Accord. Now there is an argument in support of safety standards.

[@roburb73]

That cut deep, Erin! I love my car 🤣🤣. Yes, I paid $90k (1.99%) for my car (taxes & registration included) and $60k (same as above) for my wife's (2.9%) Even with that, we're under 10% so we're good. The most important part is that we invest 4/5x our car payments each month. If you're at the median income, I agree with you 100%! The same goes for a house and being house poor! Great video!

[@Iffy50]

What do you make? $500K/year? More? Are you young? I would have thought you would be buying your vehicles with cash?

[@roburb73]

@@Iffy50 , We make a great income. We could pay cash, but at a minimum we can leave the cash sitting in an account that's guaranteed to earn 2x what my car rate is. We don't do that, all our cash is invested so in the 5 years we pay on the cars we will make much more. If we removed $150k from investments we'd lose much more on growth then the minimal amount of interest we'll pay.

[@IrisP989]

What cars did you purchase?

[@roburb73]

@@IrisP989 '22 BMW X3M Competition and a '22 Toyota TRD Pro 4-Runner.

[@ErinTalksMoney]

hahaha!! I should have put *except for Rob* at the end of the title! 😂 You enjoy your cars and your retirement when it comes!!

[@tothra]

I'm a big fan of not spending major $ for my daily driver / work car. I'm retiring in 3-5 years, so I was looking for really cheap. I bought a 2023 Hyundai Venue, Limited trim. It's loaded with almost every safety feature and even has wireless phone charging, sat nav, and heated car seats. I bought it new for less than $25,000. I traded in my 2014 compact vehicle for $3,600 credit. Due to my good credit, I financed it for a few years at 3.49%. Hyundai gives 3 years of free regular maintenance on all new car purchases The dealer I bought it from gave me a limited lifetime powertrain warranty (which I read through and highlighted the important sections). I pretty much just have to keep up on the recommended maintenance to maintain that warranty. There is no need to spend major dollars on a daily driver 😊

[@ibmtpx24]

$4k in 2003 for a 1996 used accord. $10k in 2020 for a 2015 Mazda. Networth > $1M. The cars will never interfere my retire plan.

[@nathanyoder4509]

Really great points and breakdown Erin! I am thinking about riding my bike everywhere now😂

[@khc8800]

Perfect timing for me, as I’m now shopping for a car. I’m completely EV only, so there’s another factor - battery technology develops so quick that leasing makes the most sense. I’ve actually been leasing since 2017, with my last being a one-pay 3yr 10k mi that came below $2950 after rebates. Just mind blowing. But right now (March/ April 2023) no such deals. Quite the opposite, and I’m facing exactly that 35% rule for purchase. I’m very hesitant because of unknown potential recession on the horizon. I would never take a loan on a depreciating asset if I can plan for it. Interest rates are too high. Used EVs are now also just the most horrible leftovers. Or they’re priced so close to new models that it flips your thinking.

[@buyerclub2]

Good video and I agree with most everything. Buying slightly used, is the way to go. Which leads to the question of where to buy, private party, or some type of dealership. One thing I learned is the more you spend time on research the better off you will be in getting a good car at a good price. Honestly, I think because of many variables, car buying has changed greatly in the last 20 years, and for many purchasing a car may not make sense. (I do remember telling people, that my mother who drove less than 5,000 miles a year, would have been better off just hiring a taxi (uber) everytime she wanted to go somewhere other than owning a car and driving .- AND she hated driviing too!! Final point, while cars have gone up in price- they also are tending to be more durable . So it would be good to determine is has the average cost of ownershp of a car in 2000, gone up or down in the 2023.

[@garrettponciroli8987]

Thanks! Keep up the good work.

[@ErinTalksMoney]

Thank you!!! 🙏

[@Jazzmaster1992]

Gotta say I appreciate you not doing what so many other people do, which is talk down to folks and tell them they shouldn't be financing a car at all because it's a depreciating asset, blah blah blah. Yes, cars are outrageously expensive, but as you pointed out, critical to own especially in many cities and towns in North America. And some people want something a little nicer that will also last a while instead of a beater they're constantly putting money into and don't really enjoy owning or driving.

[@kimmer6]

5 years ago I sold my apartment building East of San Francisco and retired. Big bucks. For about 2 weeks after escrow closed, I was thinking about buying a very nicely restored Mustang. A fellow from Texas owned it and everything was brought up to better than new condition. He had a spare engine in a crate that went with the sale. It was a top notched very costly full professional restoration. Just perfect! I have always loved Mustangs and wanted one since I was a little kid. But....I decided against it. Probably for the better. I had about 21 hours flight time in a Cessna 150 in college in the 1970's. This Mustang might have kilt me for sure. And 65 gallons of Avgas burn per hour if you go easy on it and keep it under 250mph in straight and level flight. So I bought a used Kia Soul instead.

[@f.-j.j.5738]

One paid off car between me and my husband. Requires good planification but not very inconvenient. We have a ride share budget that helps out for emergencies and it is very very far from costing as much as gas or insurance on a second car.

[@ramenandgyoza702]

Excellent video Erin! 🙌🙌🙌 i always learn something new watching your videos! This video made me appreciate our paid for cars. Theyre nothing fancy just an old camry and crv but they're reliable, cheap to maintain and no car payments! 😀

[@ErinTalksMoney]

You're so welcome!!! Thanks so much!! 🙏

[@cisium1184]

I've never owned a new car. Haven't had a car loan since my third car in 1989, which was $7,000. Haven't had a car since January 2022. Now I rides a motorcycle (paid cash), with Uber/Zipcar/rent on the rare occasions I need one. Cars are just too expensive now. Unless they get much smaller and much cheaper, I'm simply going to go without.

[@ThePantherproof]

7:27 If you are in one of the special enclaves with Rail Transit, you can cut down greatly on transportation costs.

[@LoriLWorden]

Fun video, thanks Erin! During the pandemic I finally (whew!) started living within my means. The first thing to go were my student loans & the second thing to go was my car payment. I am finally left with money at the end of the month -- yay! I hope to keep my Subaru for a long time -- I love your 20 year goal, wow!

[@ErinTalksMoney]

Love that, great job!!!!

[@colinmackenzie4363]

I found your channel yesterday, I have already subscribed. This was the first video I watched. I've 66 and got my first german pension payment last month. I'm Scottish and live in Berlin , Germany. My german girlfriend just suggested that we my need to buy a car, and KZbin suggested this video. I haven't owned a vehicle since 1991, a Daihatsu Minibus that cost me 3000 Guilders ( old dutch money ). I really don't want an ICE vehicle and EV are still too expensive, maybe when Tesla is producing a cheaper car on their next platform. My girlfriend and I have several bikes and whizz around Berlin with them. Anyway before I go off on another tangent , great channel, I love your happy positive attitude, the videos I've seen already are great, keep making them and I wish you tons of success in your other ventures. 😊

[@ErinTalksMoney]

Thanks 🙏 so much! Welcome to the channel!! Good luck on your car purchase

[@colinmackenzie4363]

@@ErinTalksMoney Thanks. I'm happy to say that we're not buying a car. We're moving to an apartment outside Berlin, which is accessible from Berlin with an hourly regional train service. Keep making the great videos. 😊

[@mdoneg]

Great video. As a mortgage lender and property investor we drive older cars. 94’ Miata, 2011 Lexus & 2015 Audi all paid for. It’s so tempting to buy a new vehicle, but instead that money has gone to purchase more properties. I see it every day in my business (huge car debt and student loan debt), keeping people from buying a home or putting money aside. My suggestion, buy a late model used vehicle cash or finance a small amount (don’t pay for a warranty)!

[@jayafow84]

Have had my 06 Sion for 17 yrs and my2010 f150 for 4yrs both paid for and run great. Last cars we'll ever by.

[@jeffmorton5539]

Paid $23,000 cash for my 2009 RAV4 Limited back in 2012. Still driving it. I did pretty good w my buy. Ideal loan length 0 😂.

[@kay203]

I've had very old cars when I was really poor that stopped in the middle of the road fairly often. After that, I've always bought a new car only but drove minimum 10 yrs and stuck to very basic models. That works pretty fine too

[@IrisP989]

Our vehicle would definitely not be a reason for not retiring. We own one car, our 2021 Tesla model Y (I don't drive). It cost $60K brand new and purchased it with a down payment of $19K or $20K, 2.49% interest rate for 72 months. The monthly payment is $520 and we can pay it off right now but think that it is not wise.

[@fransinigiraldo4695]

I’m so amazed at how much we think alike. I pay cash for my cars and the last 2 I’ve had I’ve got salvaged ones that I purchased from mechanics in my town. Never an issue w them. Last one I paid $8300 for and works wonderfully, looks and runs awesome. Plus insurance is cheaper as well. I invested the money I would have spent in real estate that has quintupled in value since.

[@1962joeshmoe]

I bought a 1986 Volkswagen Vanagon for $3000 cash 15 years ago and a 2014 Dodge Dart for $6000 cash in 2020. I drive them both with pride knowing I am living below my means. It embarasses my daughter, whose college I am paying for with veterans benefits and out of pocket. That just puts a bigger smile on my face.😊

[@JoseGarcia-oo4mc]

Excellent

[@fherrick1]

Lived in the city and saved my money. When I moved out, I bought a simple used car. And this did allow me to retire early. So yay for me! But now I need to do is find a pretty woman (like yourself) willing to date an early-retired fellow who drives a cheap car.

[@herlanrulz]

Good video. Only issue is the trim package comment. The OEM's making less basic trim package cars is a profit per vehicle decision that has held over from when they were trying to get the most profit per vehicle when chips were scarce. Now it's just a profit play. Until buyers demand basic options, they'll keep doing it.

[@tonyflaminio2719]

Great info Erin! Paid $30,000 for a 3 yr old Audi Q5 with wok miles, still driving Before that it was $25,000 for a Acura TL with 15,000 miles, both paid with cash. Ran the Acura TL to over 200,000 miles. Like the charts for what I can afford. I had not seen the one based on paying for it with cash.

[@gtamantube]

I definitely quit buying new cars because of first year depreciation and bs fees; but I have 4 newer used vehicles and enjoy them 🎉; they won’t stop me from retiring

[@jasonwills6694]

280k on my 2008 Focus. Just paid cash for a 2018 Focus 15k. I bought nice cars in my 20's, it was fun. 49 now and smarter.

[@joseCalderon1976]

Yup I agree with you. My last two vehicles that I bought were a 2003 Trailblazer and a 2012 Infiniti m37. They both have high mileage, but I maintain them. And they both look very nice from the inside and out. I paid $10k for each. And instead of paying car mortgage that goes nowhere but the trash and depreciation, I'm using the saved money to pay off my house, invest in my retirement account, save money and other important things like that. Driving around in an overpriced vehicle to just go to work IS NOT one of my priorities. Thanks for the video. Subscribed 👍

[@MKF1205]

Our current car costed us about $51,000 in 2017. It was a 2016 model with about 9000 miles. The sticker price for the car when it was new was about $80,000. It was such a great deal and we paid cash for it. In the last 35 years, we only purchased two new cars. And we have been able to manage with one car since 2017.

[@tristonwebb7045]

8:00. Rural areas leave us growing up not knowing some people genuinely don’t drive or get cars 😅😅

[@CelticsWin7]

I purchased my 2011 Chevy Impala LT with 36k miles in late 2012 for $18,000 cash. Fast forward to 2023 it's at 191k miles and I haven't had a car payment in about 11 years! I've been using that money to save and invest. Hopefully I can get another 100k miles out of my current car as current car prices are insane. Great video!

[@jezzarisky]

E-bikes are becoming a great boon especially as a second vehicle, much much cheaper than a used car

[@kenmcclow8963]

I have three cars, all used. I find the best time to buy a car is after someone else leased it for three years and returned it. Lease returns tend to have lower miles than owned cars and most of the large depreciation is in the first 2-3 years. My two newest cars are 8 years old and the third one is 19 years old. One of my cars is an EV. It costs about $40-50 per month to charge at home in my driveway while I am sleeping. The other car is gas and if driven the same daily commute as the EV cost's $55 every five days. That's why the gas car normally sits in the driveway. If it didn't have a trailer hitch, or if the EV did, I could own one car. I did have payments, but I don't now and I prefer not having any payments, but then I also have no warranty, so if anything happens, I have to fix it myself, or pay to have it done. I live in a rural town 15 miles from a small city and 50 miles from a large city. We have a bus once per hour during the day five days a week and about four buses on weekend days. Transit is not a strong point that it could be in the city. I ride the bus when one of my cars needs to go to a shop if they don't have a loaner. If I lived in the city, I would have better access to transit, but my house would cost more, so I probably wouldn't save a lot just having one car.

[@philipmiller7431]

I am a Truck Driver. I go out and sleep overnight and then return home the next day. A work shift for me is 2 days. I have 2 cars: A 1994 Ford Probe and 2017 Ford Fiesta, all well maintained. I keep my 1994 as a back up. If my 2017 doesn't start, I hop into my 1994 and go to work. My 1994 is worth probably $500 on the market. If I miss a Run (2 days) I lose more than $500 in lost wages. My back up car is peace of mind.

[@DesertMav]

I just purchased a 2023 Ford Maverick Hybrid pickup truck for about $28k a few weeks ago. I paid off my last car about 6 years ago. The changes that I see in the car market are insane. New cars are averaging about $47k and used cars are averaging about $35k from what I've seen. There are many factors leading and causing this to happen. I chose my vehicle since it fits exactly what I was looking for in a new vehicle. The issue is that tons of people see things the same way and if I sold my new vehicle today, the dealerships and manufacturers know this as well. They are capitalizing on the lack of supply and making vehicles worth more money by cutting manufacturing. Dealerships in turn, mark up the price of new vehicles as well. If I refused to purchase my vehicle, the dealership would have marked it up about $10-15k making my vehicle go from $28k to about $40-45k.

[@wmb9419]

So it's been a few years since I last had to buy a car. In 2014 I got another Craigslist special, a 2012 Buick Lacrosse for 18,500. Then I sold my 2006 Buick and got 5000 for that. At the time the car was still under factory warranty and that's how I like to buy them. I picked up a 2012 Volvo wagon that year as well. Both cars are running like champs. With an average of about 105,000 miles on each, I expect to get quite a few more years out of them. One thing that has benefitted me is buying them when my current car is still running well. Nothing worse than being under pressure, going into a dealership and having to finance them. I like to pay cash and do this on my timeline. Of course we can't talk about it in front of the current car or she'll get mad and throw a tie rod out of spite. It s a thing.

[@bseneca1997]

2003 bmw m3 purchased used 38k about 20 years ago. Still have the car, but it was definitely a mistake in hindsight.

[@BeerBikes]

haha got ya by one year, 16 years, 150k miles change the oil every 5k miles or so, still running like a champ! knock on wood. awesome vid! keep'em coming. Peace!

[@ErinTalksMoney]

Nice!!! Keep driving it!

[@DeanBKK]

I agree with you on everything except the "cars lose 20% value within the first year and 15% every following year". Using a 2020 Rav4 for example (3 years old), they were $30k new for base model, and 3 years later they are still $25-26k for ones that have averaged less than 15k miles per year. The used car market is very high right now.

[@stelliform]

I paid $32k for my Ford Mustang v6 in 2012. I love the vehicle and take good care of it. I know it’s getting older and at 136k miles I’ll soon have some expensive repairs. However, I’m currently thinking of just paying for repairs. It’s extremely reliable, but at sometime in the next couple of years I expect the transmission to give out. A rebuilt transmission will cost me around $6k. Other than that I don’t anticipate any repairs beyond normal wear and tear, so I think I’ll keep rolling with what I’ve got.

[@MeltingRubberZ28]

You could probably buy a brand new transmission for less than 6k.

[@stelliform]

@@MeltingRubberZ28 About 5 years ago, I got a remanufactured Ford transmission with warranty installed for about $3.5k for a different car. I'm budgeting $6k due to inflation, but I haven't actually quoted them out as my car is running really well right now.

[@josephstevens9888]

I have two vehicles; 1995 Dodge Ram pickup (350K miles) and 2011 Chrysler 200 (150K miles). I bought both of them new, paid them off ahead of schedule, and they're both still running. Even though both are old, I try to keep them in good shape. I plan to buy a "newer" truck in the next couple of years, however it will be used, not new.

[@JohnPMiller]

In November 2017, I bought a used 2011 Toyota Prius for $13354. I bought it with 31561 miles, and in March 2023 it has 93640 miles. I have spent $3952 to buy 1401 gallons of gas (mostly at Costco). I bought new tires last year, and I get the oil changed every 5000 miles (although this is often done by my brother who doesn't trust mechanics). I've never bought a new car, but later in my career, my company provided a new car every two years, which was the world's greatest perk. However, don't assume that new cars have no problems. My new Renault Scenic was in the shop more than any used car I've ever had.

[@Thomas-po4ex]

The last car I bought was my 2019 Ford Fusion. I bought the car in 2021 for around $19,000. Paid cash for it. The car had around 35,000 miles on it when I bought it, and it was one of the highest trim levels for that car having an MSRP of around. $38,000. Although, I don't know how good of a buy that car is considering the entire engine block had to be replaced after I had barely driven the car 10,000 miles. Older cars are definitely more reliable. Luckily the manufacturer covered the cost of repair and for my rental vehicle as well, but the repair still took over a month to complete. I have also had a wheel bearing go out since I bought the car and had a flat tire during a road trip. Still, I did not spend a fortune to get it and still have all the nice luxury features like lane keeping assistance, adaptive cruise control, leather heated and ventilated seats, etc. Still pretty worried about how long that car will last especially since Ford discontinued the model.

[@Allegan49010]

It's a shame that a vehicle really has become a necessity for something you loose so much of your hard earned income on. Another nice video on realistic expense.

[@ErinTalksMoney]

Totally agree

[@kevinhoock9742]

We got married in 1981 and both our cars were paid off . We wanted to save for a house (interest rates were18% then) so we traded in our cars the first few times for newer lower mileage cars and paid cash on the difference with a car fund savings account that we added to weekly . After that from a new Chevette ,Cavilere , Buick Skylark , Nissan Sentra , Honda Accord, Honda CRV 2006, 2012, 2017 and now a 2019 Ridgeline (retired in 2014) we have NEVER had a car payment . To pay interest and higher insurance on something that depreciates didn't seem like a good idea so we never had anything really nice until the Ridgeline 2019 that we bought for invoice in 2018 for 39K minus trade so 20 K. We only have ONE vechicle now and it has cut our costs in half and worked out fine !!! Great Video Erin ..

[@ErinTalksMoney]

Thanks for sharing Kevin!

[@MarcDoughty]

I'm 40. My first car was $6K used. Second was a $17K new subcompact. I just bought my third, which was a $20K hatchback. I guess that means I've averaged under $2K/year of car payments since I've been driving (it'll go down after this one is paid off, too). I've never had trouble getting around, or having a family. I've moved, camped, gone on road trips, and I even kayak with my wife using cheap cars. Don't be fooled into thinking you need a $45K car every three years.

[@atobpe]

Erin - good video. As a senior American, I learned to lease my vehicles about 30 years ago or so. I know that the numbers in the long run are a bit more expensive, but there are advantages to leasing: 1) lower montly payments, 2) you get to test drive the vehicle for a few years :-), and 3) you can purchase the vehicle at the end of the lease for a pre-defined cost (usually around half of the new price) if you like it. If not, you hand them that keys and say, "I'd like to lease another one." If you are one that takes good care of a vehicle like I do, it has worked out nicely for me. If you do not take good care of a vehicle, you may have pay for repairs at the end of the lease. Also, you must stay within the allotted mileage or you get a big surprise at the end of the lease. That happened to me one time and I purchased the car to avoid the mileage overrun.

[@davidkerins8464]

You hit it right on the nose as of right now my wife and I have no car payments and we hope we dont have to buy again for at least 5 more years

[@LoriLWorden]

I would love, love, love an episode about retirement plans that include an expensive purchase like an RV or a Boat.

[@jdgolf499]

Very informative information. Just a couple points, from an auto industry insider! First, due to covid and the chip shortage we experienced, the auto industry was constrained as to how many cars they could produce, so the choice was to build the high cost, high margin vehicles. This somewhat skews the average price to the higher side at this time. Second, new car sales include cars that are leased. A large percentage of cars are leased by people that could no way afford to buy the same vehicle. On the affordability side, I'll use my youngest daughter as an example. She found a really nice car, a Chevy Trailblazer, (I'm actually a Ford guy) that had a sticker of about $28,000. I was shocked what it had. All Wheel Drive, remote start, heated seats, backup camera, etc. It's not the smallest car made, but big enough that we feel she is safe in it. As with a lot of people, she sold her current car for $5,000, so that helped. It was a 14 year old vehicle. I believe we are coming out of the chip shortage, so I believe, without any insider info, that we will start seeing rebates and good financing deals again, as the lots start filling up.

[@ErinTalksMoney]

Thanks for sharing! The chip shortage certainly had a MAJOR impact on recent prices. I hope are are turning a corner soon 😊

[@mikewypasek8855]

August 2022 $32k Bronco Sport. Had a trade in of a “hot” car, 33k miles, 5 years old, 4k less than I had paid. Bronco is my last new car ill buy

[@PCConditioning]

Erin- do you know if the $49,500 figure includes sales tax? I always remind people when they budget for a new(er) vehicle to figure in sales tax, excise tax, insurance, and maintenance to everything, as this will really tell you if it fits your budget. I also use the Dave Ramsey advice (your vehicle's value should not be greater than 50% of your annual income).

[@inertiaforce7846]

Driving a 99 Camry four cylinder here. Had it since 2002. That's 21 years lol. Always put synthetic oil in it.

[@rba4377]

Just came across you watching the financial diet! Currently going through debilitating health issues (for years), could you please make a video on creating a career from home from scratch? The fiver thing is not a stable income and too stressfull for people w health issues. Please talk more about your career as you mentioned to chelsea about billing and any more ideas would be SO SO helpful for my partner and I! THANK YOU!

[@ErinTalksMoney]

Welcome to the channel! I will have to do a video on that!

[@rba4377]

@@ErinTalksMoney would love that too

[@loveandjoy810]

I just bought a car a little over a year ago. It was $25,000. I put $5,000 down. I got a side hustle and paid it off in 14 months. It was a 5 year car note. I hate car debt.