Transcription
Guys, if you have a car payment, I want you to make a decision today. Plan to never finance another car the rest of your life. And I'm dead serious about this.
The car payment is probably the single most normalized, wealth destroying decision in America. And almost everybody watching this video has a car payment. I'm telling you right now, you don't want a car payment, not next year, not after the car payment you have right now, not ever again.
I've been doing this a long time, guys, and I cannot tell you how many people I've sat down with and talked to about their money, who make pretty good money, not minimum wage. They have good incomes, and they still feel broke every single month. People budget, people try to save, and then people invest a little bit of their money, but they never get ahead. And part of the reason is because nine times out of 10, they have $500, $600, $700 a month coming out of their check to pay a car. That same thing, a car keeps showing up, is sitting right there in their driveway.
Think about it like this, okay? The average American new car cost about $49,000. The average payment for a new car is right around almost $800 a month. For a used car, it's over $500 a month. And people are just financing these cars for six and seven and eight years. And it's like you're making one of the largest monthly payments in your life on something that's guaranteed to go down in value. A car payment is not just a simple purchase nowadays. It's a subscription. You're signing up. When you have a car payment, you are basically signing up for a guarantee to lose wealth. It's like, where can I throw my money out the window? Sign me up. Right? That's basically what you're doing.
Let me tell you something a little odd to me. Maybe you can help me understand this, guys. I did a poll on YouTube community tab just a couple days ago and I asked what do you think is a reasonable car payment? And almost half the people, 43, 44% said zero, no car payment is the best decision in terms of a car payment. Another 40% or 41% said a tiny payment between $0 and $300. And about 7,000 people responded to the poll. So that's about 84, 85, 86% of all the people that responded to that unscientific poll who said no car payment or almost no car payment is the best.
So here's my question, and maybe you can help me answer this in the comment section below. If most people know that car loans and car payments are bad, why do we still do it? What goes on psychologically in our brains where we know something like car payments is wrong and bad for our money, but we still take out the loans anyway? Let me know in the comments below.
According to the data, let me give you a little more data here, okay? More than 100 million Americans currently have a car loan with the total outstanding automobile loan debt in America reaching a record $1.5 trillion. That's something to think about. If most people don't want a car payment or think a car payment, too big of a car payment is bad, why does America owe $1.5 trillion in car payments?
Now, I want you to remember this about a car payment. Okay? When you have a car payment, you're buying the payment just as much, really, as you're buying the car. See, the dealership, and dealerships are funny. You got to watch them. Dealerships really aren't selling you a car. Yeah, you're getting a car, but they're getting your payment. And in case you didn't know, let me just break this to you. Some of you, many of you know this, some don't. Financing is where most car dealerships make the bulk of their money. They, the markup on the car they sold you is pennies compared to what they're going to get over the course of years, five to seven years of you making a payment. They know this. That's why the loans are the main part of the business. Right? It's all about financing, not necessarily the cars.
Think about it like this. You know how McDonald's sells hamburgers, right? But McDonald's primary business is commercial real estate. McDonald's is a commercial real estate company that happens to sell hamburgers. The dealership's main business is as a finance company, and they happen to sell cars too, right? That's why the first thing when you go to a dealership, typically, not always, but a lot of times, the first thing they ask you is not what price you can afford for the car. They ask you, "What monthly payment would you like?" Because dealerships and and car salesmen, they know that once you focus on the payment, you stop caring about the total price of the car. That's the psychology game they play.
Financing a car disconnects you from the pain of actually having to spend the money. You stop caring that the car is $40,000 because $40,000 sounds like a ton. And all you can say to yourself is, "Can I afford the $700 payment?" And that's where they stay on in terms of trying to sell you the car. Can you afford the payment? If you had to walk in and hand somebody $40,000 in cash, you probably would think very differently about buying a car. But $700 a month, that hits different, right? That's more digestible and it isn't nearly as painful in your own brain than $40,000. So, because that feels manageable, that's what the car dealership sticks on. But cash makes you careful. Payments make you comfortable spending your money. It's the same psychology with credit cards, right?
But here's another reason that you never ever want car payments, and that's depreciation. That's the real problem, right? A car is not an investment. A car is actually one of the worst financial purchases on the planet. The moment you buy it, it starts to lose value immediately. And every day, every week, every month, the car is worth less and less. But a lot of times you're still making payments on a car that's going down in value. You still owe the same payment every month even though it's worth less and less. So what happens? You end up owing money on something that's dropping in value every day. That is the very definition of what I call not just bad debt, but horrible debt.
And here's the kicker. The payment is just the beginning. Insurance goes up. We've all experienced that lately. You got to pay taxes. You got to get tax, you know, registration. You got to keep gas in the car. You got to get tires. You got to get do repairs and maintenance. The car payment is just a cover charge. That just gets you in the door. The real expenses start after.
Now, look, if you have a car payment, let me just say this. I probably should have said it up front. I'm not mad at you. I'm not beating you up. There's no heat, no judgment, right? We all make mistakes. We all do things that we wish we hadn't done. But you just have to consider not making this mistake over the long course of a lifetime. Don't make it a lifetime habit to have these car payments. At some point, you got to consider, strongly consider cutting them off.
And you may say to yourself, "Well, what about leasing a car? I like to lease cars so I can drive a nice, reliable car for only $300 a month." Let me address this for a second, okay? Leasing is not a smarter option. Leasing is simply a permanent car payment. Leasing a car is like paying rent for a car. It's okay for a little bit, right? A year or two, but don't make a lifestyle out of renting a home. Don't make a lifestyle out of leasing or renting cars. Basically, when you lease a car, it's like going into Enterprise or Budget, one of those other car rental places, and just renting that car for three years. You're not buying it for keeps. You're just renting it. If you wouldn't do that, then you probably shouldn't lease a car. You never own it. You have mileage limits. You get penalties when you lease a car. You have to restart the payment every few years. At least a loan ends, right? A lease, all it does is just restart. So leasing is renting a lifestyle that you really can afford. It's renting a car that you really can afford to own. At the end of the day, that's really all leasing is.
Now listen, let me say this, okay? I've helped a lot of people buy used cars over the years, right? I help friends, I help family, you name it, right? And most people buy used cars really, really unprepared in an emergency, when their emotions are high, when they got the car went out on Friday, they got a beat of work on Monday, they don't know what they're going to do, so they end up spending Saturday car shopping and wanting to buy something quick. And when you buy something quick with high emotions, you can easily make mistakes. Look, that's a problem. Okay, I literally wrote this book right here as a step-by-step guide through the entire process of buying a good used car with cash. What to check, what to watch out for, what to say to the seller or the dealership, how to negotiate, how to avoid scams and people trying to get you. Because here's the deal. This one decision about buying a car, if you mess it up, you can mess up your money for years if you're not careful. The link to grab this book is in the description box below. You can just go to buycarswithcash.com.
Now, here's the truth. Okay, the book is going to help you, but the first thing you have to do is believe that it's possible for you to get a good car with cash. See, most people actually can buy a car cash with a little bit of planning, right? But a lot of people just never allow the idea into their mind. See, some people, not everybody, some people have been trained and conditioned to believe that having a car payment, it's just a normal part of life. No big deal. But it's not normal. It's just common. There's a difference. A car payment is not really a necessity, guys. It's a financial habit that you can actually break. And I broke that habit in my life about 15 years ago. And I'm not going back. I'm never having a car payment ever again in my life.
And here's the deal. Most people aren't broke because they don't have enough income. A lot of times it's just limited thinking and poor habits that we justify and we normalize in our own head that's keeping us broke or keeping us feeling like we're living paycheck to paycheck. Here's how you break that habit. Let me give you a few things to think about. Okay, first thing is this. For the next 18 months or so, literally 18 months, save $500 per month. If you save $500 per month for 18 months, that's about $9,000 that you will have cash. And you may be saying, "That's hard. That's difficult. I can't do it." Well, you got to do something a little different. If you want something different, maybe you can work a second job for 18 months. Whatever it is, try to save $500 a month. You have to plan and you have to save to do this right. Buy a reliable car cash with that $9,000 after 18 months by following the steps in the book that I gave. Take that $9,000 and buy you a used car. You can get a used car, a good used car for $9,000. Still, the car is going to be older. The car is going to have higher mileage. We know that, right? But again, follow the steps.
Step two, the second thing you do after you buy that $9,000 car in 18 months, keep saving about $500 a month for another 12 months. That's 30 months total of $500 a month. If you keep saving another $500 a month for 12 more months, now you got $6,000 cash. Again, now you take your $9,000 car that has depreciated because you put some wear and tear and mileage on the car over 30 months, and that car now, that $9,000 car is now worth $7,000. You take your $6,000 cash, add it to the sale of your $7,000 car. Now you got $13,000 for the next car that you can buy cash. And we're only 30 months into it, two and a half years. Your $13,000 car is going to be a little bit better car. It's not going to be a great car, but it's going to be a little bit better.
Now, after you have in 30 months, you have a $13,000 car, keep saving $300 a month for 12 more months. Just $300. Back off the $500. Now you're only saving $300 a month for 12 more months. So now what are we at? 42 months. Now you got an additional $300 a month for 12 months is $3,600. Now your $13,000 car has depreciated in that year. And now you go ahead and sell your $13,000 car for $12,000. Now you take that $12,000 cash plus your $3,600 that you saved up $300 a month for the last 12 months. That's $15,600. Now you go out and buy you a $15,000 car cash, and we're about 42 months in. So we're about what, three and a half years in. You just upgraded your life in three and a half years with no debt. Saving money, putting it towards transportation. Sounds easy on paper. It's difficult for a lot of people to do that. But that is a structured plan that you could really use. Anybody could.
The first thing some of you will do right now, I know what you're thinking. You're fighting the plan I just laid out because the first thing you do is see negative. The first thing you do is see problems. The first thing you do is you see impossibilities. You see that, oh, here's why that can't happen. Here's what would go wrong. Here's why I can't do that. And you just put up this wall of barriers that ain't even there. You just made them up. Because a lot of people have a negative thought process. When you introduce a solution, the first thing that comes to their mind is, "That ain't going to work." Some people's brain is just wired like that. I'm not mad at you, but I'm saying if you want to set a plan to do something like buy a car cash, you got to rewire the way you think because it's possible. People are doing it every single day all around you, right? If you buy all your cars cash, do me a favor. Let me know in the comments because I want people to see that some people do this. It's not made up. It's not a fairy tale. This can be done. So, drop that in the comments if you buy your cars cash.
Most car purchases, guys, are either identity decisions because we want to look a certain way or want to feel a certain way in a car. Or for a lot of people, buying a car is a safety issue. Let's just address that, right? Because a lot of people say, "I want to get a newer car because I want to feel safe on the road." But I want to tell you now, okay? You can find a good, solid, safe car used for $9, $10,000. You don't have to spend $25 and $30,000 to get a safe car. You just have to plan. It's going to take a little longer to find a good one.
But here's the deal. Maybe while you're saving and planning, you could be learning a little bit about cars the whole time. I'm not saying you to become some certified mechanic. No. But look, when it comes to cars, a little bit of knowledge can go a long way, right? Just a little bit of knowledge. Have you ever seen a mechanic driving a horrible car? No. Mechanics, they drive older cars that work. Older cars that run. Usually a good mechanic, he or she, they don't have a bunch of brand new cars in their driveway. They might have one, but for the most part, a mechanic knows how to take a car that looks bad and make it run good. That's what I'm telling you. Just a little bit of knowledge can help you go from choosing lemons to choosing winners when it comes to cars. So maybe you need to be doing a little bit of studying before you buy a car, right?
Look, if you work hard and you still feel like you're never getting ahead and you got car payments, maybe car payments may be the problem that's helping hold you back. I'm just saying. Look, if you're ready to build some structure, join us in the upcoming four-step financial reset. It's coming up here in just a few weeks. Join us. The link to the four-step financial reset is below. It's a 30-day structured system to help you get better with your money. And we just finished up our first cohort. We got some great testimonies coming out of the first cohort. So, I want you to be a part of the next one coming up here in just a few weeks. Check out that link below.
Listen guys, this single decision that can change everything in your life financially is ending your car payment cycle. I just want to share with you guys that car payments, they don't have to be normalized. They don't have to be a part of your life. If you got value from this video, do me a favor, drop me a comment below, and most importantly, share this video with somebody who you know. Don't forget to check out the links in the description box below. Hey, the best person who's going to take care of that old you is the young you. Guys, take good care of yourself and take care of others. Until the next video.