Buying A Car the Right Way #470

car the right way. Yeah, and well, I would say this, if you're buying a car every year, you're doing it wrong, okay, or definitely you should be leasing if you're doing that, And we don't really recommend leasing, but if we need a new car, everyone do that either. At least that's probably the only situation which that makes sense. We're already off to a bad start, and you can do it the wrong way. There are ways to do it the wrong way, and leasing is kind of sort of the

wrong way too. Well, yeah, we'll get into all our thoughts on that in this episode. But Matt, before we get to that, I wanted to mention that there was a study that came out from U c l A. And this they basically said that there isn't a lot of learning loss if you're watching videos or listening to content at two X speed. And I thought I was gonna say that again for all of our listeners listening at two point five. Slow it down, at slow it down,

and so you can understand me. So I just wanted everybody that is listening to the two X is gonna hear that, and it's gonna mess with their heads? Did I just hear? So? I'm personally the kind of person who there's a lot of podcasts I enjoy listening to, and I don't quite have enough time to fit them all in. And if I want to fit most of them in, then I do have to listen at a faster speed. And so, depending on the podcast I do listen, it somewhere between like one point seven and two X speed.

And it's good to know that. Like I will say, I don't think I'm getting quite as much. I don't think I'm retaining quite as which as I would if I was to listen at one X. But also it's almost harder for me to listen to something at the normal speed these days. Shut up. I almost needed to be like at least one point two or I'm like, what's wrong with these people? It sounds like they're just

talking way too exactly. Well, okay, so I want to call bs on the study because I, like you, I listened to a lot of podcasts, we listen to a lot of audio books, and I want this to be true, right Like, I want to read this study, this report and say, there you go, see like you can listen to something at two x speed and retain just as much information. But dude, come on, this is confirmation by us, right like, this is something we want to be true.

And so you come across the story, it looks like it's well researched out there in U. C. L A. But if you search, like, there's a lot of other studies to that point to the fact that, oh, in fact, it does reduce your ability to retain information. But like

you said, I am okay with that. I think as long as folks are able to make the decision knowing the facts, and so if I know that I'm only going to be able to retain eighty or nine percent of the information, but if that means I'm able to listen to twice as much stuff because I'm listening to it at two x speed, then that's that's a trade off, right, Like in all throughout life, we make trade offs, and

this is one of those. And so if you are a high consumer of audio content, yeah, this is good news as long as you are aware of the decisions you're making. Yeah. So I think maybe the ideal range for people is somewhere between like one point five and one point seven if you can handle it, if you want to listen at that speed, and the first time you hear it, you're like, who does this? It's it

sounds almost garbled. But once once you kind of get used to it, Yeah, it's yeah, it's like building a muscle, like your brain gets better at it. And I will say sometimes I'll flip something on and by default it's on at like one point five and k it's like whoa whoaa, Like this sounds like it's on warp speed. But over the years she has slowly kind of ramped up her ability to listen to something faster as well.

And she's she said specifically that if I listened to it first at kind of one point two, she can then slowly ramp up because you get used to the way somebody speaks to the way they talk and the other thing too. Man, it depends on what you're listening two as well, right, Because if I'm listening to an audio book, like a narrative a story, to even two point five is not difficult for me because it it

oftentimes depends on who's narrating, right. But if it's a podcast and they're really diving into like very technical things and they're talking about the economy and the jobs report and just different things like that, uh, slow that, Yeah, you slow down because there's a lot of technical information that is more difficult to you know, when you're jumping from one bit of information to the next, to the next to the next, and none of them are really linked.

It's difficult, I think, to to follow along on a really rapid clip. Yeah, alright, well, just blessings on you. If you want to listen to How the Money a little bit faster than one x, that's totally cool, And a lot of the podcasting apps have made it so much easier to to actually do that. I know, Google Podcasts, it's like you can you can go one point six,

one point seven, one point eighty. It literally only used to be like one x one point five x two x yeah, but now yeah, a lot of and have all of those fine adjustments that you can go in there and kind of like those beer ratings on untapped, you know, and it used to be like half a point, and now you can. I think you can dial it in pretty specifically. Although I don't really post my beers there anymore. So I tried to, but the last time I was on there, I thought it was still doing

just quarter quarter of a point. I thought you can dial it in more than that. Maybe maybe I'm wrong. I really don't get on there bar Okay, So all right, but let's mention the beer that we're having on this episode. This one is called Pothole City. It's a rocky road stout. It's by Pipeworks Brewing. And we'll let you know our thoughts on this one at the end of the episode. But Matt, onto the topic in hand. Let's talk about

buying a car the right way. Yeah, yeah, exactly. Any of your transportation needs, uh, And some of the most important financial decisions that we make are done infrequently. And because of that, Matt, we we feel like a little rusty every time we perform that task. Even just doing your taxes, You're like, how do I, how do I do this again? It's coming to be that time. Fortunately, their software to help you out with that, or or if you take someone that you pay, or if you

take really good notes. That's what I do is I kind of keep this document that I refer back to and then I just have everything listed out step by step. There you go. Makes it super quick, see quick and easy? But yeah, so the average person buys a car one in every six years, and so that's plenty of time for most of us to completely forget how the process works by the next time we need to buy a car. It makes me think of traveling abroad these days. It's

been a while for pretty much all of us. I know some folks have still been been traveling abroad, but there's the truth that there are a lot of countries that won't even allow us to visit their shores right now, and so there's a lot more questions we have when we're booking that trip. Do I need trip insurance? Is the country I want to go to even accepting visitors from the US. What sort of vaccination documentation do I need?

How early do I even need to get to the airport. Again, those are the kind of questions the funnel and be like how long does it take too to go through security and stuff like that, Like I've forgotten at this point. So we all need this refresher and so that's kind of what this episode is. It's a refresher on buying a car the right way, And obviously part of that has to do with kind of what's currently happening in

the car space. We've seen a lot of change, that's right. Yeah, In a similar way, the car market has experienced a lot of turmoil. So if you bought a car six years ago, the way that you go about buying a car has changed significantly. We've seen a huge shift, especially over the past eighteen months, in pricing and just different purchasing dynamics. A global pandemic led to a chip shortage, and then that chip shortage led to supply chain issues.

All of the problems created a tighter car market, resulting in fewer cars on the lot and much much higher prices. Edmonds is even predicting that the average price of a used car is going to surpass thirty thousand dollars this year. And that's right. I actually said used cars the average used cars and o K, that's a lot of money for a second and uh form of transportation. And because so much is at stake here, it's crucial that you take the proper steps to make sure that you're going

about things in the right way. Yeah, you don't want to buy a thirty thou do lemon, that's for sure. And so let's talk about kind of more of what's changed in recent years and how those shifts impact us as consumers. If we're in the car market, Matt, you mentioned the average price of a used car is going to hit thirty dollars, which is true. I see that happening this year. But the average price of a new car costs for dollars now, which is a heck of a lot more right. And on top of that, even

fancier new cars are getting launched. For instance, like the new Jeep Grand wagoneer. It starts the starting price is almost ninety dollars, So you can get that car or that ride up into six figures. And I'm sure it's nice. It's got the perfectly quaffit interior and the fancy screen

or something like that. Yeah, everything you could look. I'm sure it's lovely, But there's just so much more we have to think through as car prices expand and as fancier cars are are put out there on the market, and there's just so much at stake, Uh, so much of your money at stake when with that next car purchase. And here's what you need to think about. Two. That ninety thousand could easily become a million dollars in thirty years if you left it to grow in the stock market.

So there is this reality that where you allocate your money makes a big difference in your ability to build more wealth. And if more of your money is going towards the four wheels that riding around in, it's gonna detract in a big way from your ability to build wealth the way you want. It's right, And why's it gonna be four wheels? Man? Why can it be one of those three wheeled vehicles you see driving down the

ones that kind of batmobiles. Yeah, yeah, they've got like two wheels up front for steering, but there's only like one like bigger wheel in the back. I still don't understand that, Like white people get those, but they look kind of interesting. There's a couple of those that we see driving around the neighborhood. But you know, folks already

know this as well. But one of the other things that we've seen change over the years is that folks have gotten way more comfortable buying a used car site unseen based on just the different pictures of the car on the internet descriptions. I'm specifically thinking about Carbona, but CarMax as well, that they both have led that charge and are the two big names in the used car buying market these days. GM they just launched car Bravo

to be another competitor in the space. Uh and and they're not just selling GM vehicles as well, they're selling all types of vehicles. So generally speaking, we do like these sites. They've made it easier to shop on line for a vehicle, and most of us are looking for some more convenience in our lives. They'll often deliver it to you, right Caravanna they've got that seven day return policy, and CarMax they've got that thirty day return policy. This gives you plenty of time to take it to the

mechanic and know if you'll like it. But this is another reason we're talking about this because the way just the actual mechanics of what it looks like to purchase a new vehicle has changed significantly. Yeah, five years ago, buying a car on the internet was not really a thing or we're taking a risk. Yeah, exactly. It was a new thing. Like I mean that we purchased our Honda Odyssey on CarMax like about I guess it's like four or five years ago. Yeah, that was kind of

even towards the beginning. Really it was kind of like this novel idea and you and I were talking, We're like, oh, do we get to see it come down like the car vending machine, like for picturing it like two little kids, like we're gonna watch a gunball like go down the spiral. That was kind of tradition. The fame was that vending machine. And now they have one literally like down the Downtown Connector in Atlanta, and now they've built ones in other

locations too as they've expanded nationwide. Always look at it. It It is cool. Yeah, but it is this new way of buying a car, and I guess not so new anymore, but but it is one of those things where it's important to note that buying online is is really helpful. I think in a lot of ways, or at least searching online some of those sites has made the car

buying used car buying process a little more transparent. But in addition to those newer companies that have gotten pretty dominant in recent years, some of the older companies like Craigslist and auto trader, even the just the classic for sales sign in the car window, those are still legitimate ways to buy the car. All those options are still around.

And the great thing is that, unlike those other sites we mentioned, the price isn't fixed, whereas like carbona, you're not gonna be able to negotiate and be like, can I get bucks off that price? And they're like, nope, the prices the price, Well, you can stay, that's right. When it's a private sale, you can haggle. And that's a beautiful thing that that might sound awful to you, though, I think that some people they're like, haggling, I don't

want to interact with another human being exactly. Let me do what I want to do, and some people don't take joy in that. I personally do take joy in that. I like to kind of negotiate the price, but some people find that to be appalling and I get it, but yeah, you want to take extra precautions to say safe if you're meeting private car sellers all over your town.

We would say meeting in the parking lot of a police station is certainly one way to help keep yourself safer when you're buying a used car from an individual. But just remember, even with the advent of these online buying services there, you can still go the old school route and sometimes that is actually going to save you

the most money. In large part mat because some of those online car buying sites they don't really have many older models up for sale, so the starting price point is usually fourteen fifteen dollars, and if you're looking for a car, a great used car in the five to fifteen thousand dollar range, you're not going to find that. There's yeah, it cannot be difficult, and honestly, that's what

we found when we purchased our vans. We purchased about about five years ago, and at the time it was about five years old, and that was the oldest and honestly that we could find. And for us then we were like, okay, this is used, but we were still paying a lot of money for a vehicle. That was something that we had to grapple with and if we wanted to save more, we would have had to look

at a more traditional method of buying. That's right for a lot of for a lot of how the money listeners who who do want to save a lot, they want to drive something that is older and cheaper. Online shopping is is probably not going to get the job done. You're gonna have to look at some of those more old school methods. You're gonna have to look at something

a little bit older than five years old. Uh. One of the other changes we've seen, too, man like in the past several years, is that we've seen the number of electric vehicles on the road skyrocket. However, that being said, range anxiety like that is still an issue when it comes to electric vehicle adoption, but massive strides have already been made since the first evs debuted. For instance, I saw the Mercedes. They just revealed this concept car that they claim is going to have a range of six

d and twenty miles, which is awesome. That's impressive. Yeah, it's comparable to what a typical busttion engine powered vehicle would be able to get on one fill up. Yeah, but you know, like once automakers are able to hit the like the five to seven hundred mile range on a single charge, mass adoption is likely going to occur.

I truly believe that's what's kept folks from jumping on evs even more because you can't have this benefit, right, So with a typical gasoline powered car, you can't have a car that where you could drive six miles if you wanted to without stopping and then take it away. I think for most people that's what caused the anxiety, Like,

that's what caused the problems. However, like if in some bizarro world, if gasoline powered cars only got like two hundred or three hundred miles per fill up, there would be no hesitation. I think when it came to folks switching over to evs, because that's what they would be used to, I would say, I think you're a little bit wrong on this because I think the average gas car when you want my miles, man, well, when you do the miles, you're not getting five miles before you

fill up. You're getting maybe and so it's important to to to realize that that's probably But here's the thing. So thirty miles per gallon on a twenty gall take. Not not on the odyssey, but dude, a lot of people are on I mean, and not not even to mention. I'm just saying, like, I think, maybe, let's say you're

getting three fifty. But here's the thing. When you fill up at the gas station, it's much quicker than it is to charge, and that's part of the slow nure in adoption is because the charging still takes so long. And so that's why the greater mileage I think is needed for in order for people to adopt evis in

higher numbers totally. But I think even just like the idea, like the fact that this was something that was available to people, even if they weren't taking advantage of it, or even if maybe on a in a perfect world, the mileage sheet says that you should be able to do this to then take that away. People don't like things being taken away from them, right, and so from a psychological standpoint, I think that that has been a

major hurdle for folks as well. But there's good news, right, because the median range of a new electric vehicle surpassed two fifty miles last year, and that's plenty of range for the way that most folks drive. And so while evs are typically more expensive upfront, some of them still come with a federal tax credit. And plus they're gonna save you a holide chunk on gas and maintenance over time.

And then on top of that, if a two to three year old EV makes sense for your family, you can save even more by letting someone else take that depreciation hit. That's right, because those first three years of ownership where you see the biggest depreciation hit come. And so yeah, if you're often for that slightly older electric vehicle, that might be the sweet spot for a lot of people, as also as the range works for you. So do you when we were talking about electric vehicles, do you

say e V typically? Like? So the reason I the reason I asked this is because so our oldest daughter, her name is Evy, and eight years ago when we named her evs as electric vehicles, as a popular term like that wasn't on our radar at all. I mean, electric vehicles existed, but I think you just called them, Oh, that's an electric car or something like that. But we often refer to electric cars now as e v's, and I feel like we name it's. It's like ten years ago,

somebody named their daughter Siri or Alexa. Like, it's probably pretty annoying right now. Yeah, but yeah, obviously I think people are going to be nearly as ubiquitous in our language. Well, and at this point I'll share it, like, I I'm sorry for everybody whose devices just activated. I just realized you're not supposed to actually say those names podcasts more, aren't you? No, I don't think so, sorry everybody. Well, so I'll share that I I had an Evy for

a long time. I bought a Nissan Leaf. In part of it was because of the tech tax credit that you mentioned, Matt, which helped plunge the price down in a big way. And you know, there weren't a lot of other folks at that period of time, almost ten years ago, willing to take that plunge into the electric vehicle market. And you're an early adopter. Yeah, well I get it. There was a big, big discrepancy in what you got then versus what you can get now there and so yeah, the range on my Leaf I think

was something like eighty miles to the charge. That was on a warm day. That's right. Well, the condition certainly affects, like how many miles you're gonna get out of it, right, And so it worked great for us as a two car family living in town where my my job was, you know, five or six miles away from the house. But I get that it wasn't it didn't make sense for a lot of folks. But like you said, that's

changed quite a bit. If the the average range on a new e V is two d and fifty miles as of last year, that's a big jump for a lot of folks, and it pushes that into the range of making sense. So I would say, yeah, with the added variety of electric vehicles that are on the market, the far superior battery range, a lot more options, there's just so many more, yeah, for people to consider. I think it makes sense and it's something that people should look into. Uh. I'll keep an eye out for the

first electric van that that rolls out. I'm looking, Well,

that's supposed to be the Voltswangen van. Yeah. You were talking about the the I D bus or whatever for forever now, but we're you know, we were recently talking about how Rivian they need to put that they need to create a van, a minivan on their you know, RT whatever, their rivian truck is called Uh, they need to build a sweet looking van on that truck platform, and that will be the first time that I am actually tempted to consider a new vehicle, but I'm probably

still not gonna do it even Yeah. Well, and well the other thing too, when you look at the numbers, and when we're talking about how much we're spending on a car, it's it's easy to look at just a sticker price, but really we need to look at the

total cost of ownership over a period of time. And the one, the one additional thing that electric vehicles have going for them is, over you know, ten fifteen years, a much lower cost of ownership because there's less to go wrong with those vehicles and you're not paying for yes Phillips every week, right, So it's going to make a big difference over time if you decide to go electric. But enough about electric vehicles. We have more to get to.

There's a whole lot of stuff you need to think about before you even start browsing the internet for that new car, and we'll get to our thoughts on that right after this break. We're back and we're talking about buying cars the right way and u. Yeah, you know, like you mentioned, we've got a lot more to talk about on the how to front here, but it's also important to explain maybe a bit more about how we think about cars because we think of them mainly as

point A to point be transportation vehicles. That's true. So you know, people who think of their cars as their baby, they're gonna come to a different conclusion about how much they should pay for a car. You know, the people who are putting the fake hilashes on the headlights, we don't do that. Yeah, we don't do that, or the antlers at Christmas. Uh, that's a different breed of folks as well. But the pure and simple fact is that

cars are liabilities, they're not assets. And so keep this in mind that buying a car that's seven to ten years old, it won't just save you quite a bit of money. We think that, uh, it actually comes with some legitimate psychological benefits as well, because man, sometimes we think that a big purchase like a new car, we think it's gonna make us happy. But we're here to tell you that it won't. No one is judging you for the car that you drive, uh, or actually if

they are like that's their own problem. Don't let those social pressures cause you to overspend on something that you really actually don't care all that much about. Being comfortable driving an older car is a good thing. The ability for you to take that money that you're saving and put that towards retirement, that is a good thing. It's not necessarily that we want you to deny yourself. However, we do want you to focus on other goals that might be a bit more important. Yeah, man, I think

you're right. And I think sometimes those societal pressures can cause us to make decisions with our money that don't align with our values, or that don't align with our desires for what our life is gonna look like. It's just kind of like everybody else is around me is doing this, and so maybe I should do it too.

And I think when we when we reconsider what a vehicle looks like our means to us in our lives, it can cause us actually to dig a little deeper and address what it is that's truly going to make us happy. Because it's not the car that's gonna make

us happy. It's stuff. The new car sent doesn't last very long, you know, and so why not cut straight to the chase and figure out that it's the things like close relationships, meaningful work that actually, you know, make us happy instead of taking a forty seven thousand dollar detour car price yeah further down the road, or a thirty thousand dollar de tour by spending the average amount

on a used car. Plus you and I, we kind of view crossing that two hundred thousand mile mark as a badge of honor, Like, if you've been driving your car long enough that you've hit that, you take some pride in in hitting that number, you should, yeah and so, And with car reliability being pretty great across the board these days, even that threshold isn't a death sentence for your car personally. Matt, I'm at miles on Homer. What how many of you have? I think a little over

a hundred on how? Which are the names of our vans? By the way, if folks were wondering, listeners actually named our vans. So when stuck with the h motifs, since we're talking about Honda's How is for the sci fi robot. Homer is for the Atlanta Braves mascot that likes to run around and mess with people in the stands, and so that naming convention won the contests, right, Yeah, And so I think, really, you know, my car is a

two thousand and six. I think part of this is is we just need a mental reframe on, you know, when it comes to how we view our car. And it's okay for some people to be car obsessed and to say that's my craft beer equivalent and I put more of my money there, but for most of us, for most of us, this is a place where we can save substantial amounts of money, enabling us to live the lives we actually want. Yeah, and I was thinking you mentioned how like it should be a badge of honor.

Somebody should make like a bumper sticker with different mileage amounts on there, sort of like achievement badges, you know, like if it's all about gamification, and if we can find different ways to like mentally shift not only how you see your own vehicle, but how like the people around you see it, we should literally be wearing that

as a badge of honor. And then as you progress in miles, you get to add like new stickers, and all of a sudden, like instead of like thirteen point one for like a half you know, twenty six point two. I want it to be actual miles that your car is currently on. There you go, were there? Yeah, advertise

it to everyone. I always like the bumper sticker that people would put on like a crumby old Toyota camera or something that's like twenty years old, and it said, don't let this car fuol you my treasures in heaven, And it's just ironic. I like that. One of the other steps to buying a car that you must not skip is to ask yourself if you even need this car. We want you to assess your current situation. Just because you've always gotten a new ride every for six years,

that doesn't mean that you should continue a trend. We want you to ask yourself, can we get by as a one car family? Like, what's the current and future state of working from home? What does that look like for you? Something like one in seven jobs are at work from home now. And if you used to go into the office but you don't anymore, it's worth questioning whether or not you actually need another car before you

buy it. Yeah, you might be all about the idea of replacing that car because it's getting too old, and then you're like wait a second, I don't drive nearly as much as I used to write. A second, our cars sitting the driveway nine and nine percent of the time anyway, and there's always at least one home. Uh, maybe we only need one car exactly. And that is so true about cars, is that they sit idle so much of the time, something like of the time your

car is not in use. And so yeah, if you can figure out that extra four percent of the time, you can save a bundle. And yeah, there are other ways to get around besides cars. That's part of it too, Matt. And that's what we want to emphasize is cargo bikes are one of our favorite ways for for people to haul their stuff around, haul their kiddos around, go get groceries, and just get dropped my kids morning at school on the bike, even though it was thirty five degrees. Uh

it's fun. Yeah, yeah it is. And can I say how the Sometimes they'll complain, but we make a it's an event true. And what we're asking people to do is to look ahead and forecast their needs, not just get what they want. And Matt, you mentioned working from home, but I'm also thinking about size of the family here. Right. If you're if you're thinking about growing your family, maybe adding a kiddo or two into the mix, then that

motorcycle probably isn't gonna cut it anymore. Or the two door Honda Civic, like, it's just it's not going to be the best purchase. And so I'm not going to be able to get the kid out of the car seat, uh in the back of a two door. Yes, but it's possible. I know there are people who listening right now who have done that. However, we tried that one time in a friend's car and it was extremely extremely difficult.

Well true, and I think you know, for other folks, let's say they've already got a station Wagon and they're about to to bring home their second kiddo. Well, station wagon still works for a family affort, so you might not necessarily need to upgrade. These are the kind of questions you're gonna want to ask before you actually start shopping, is like, do I need this? Do I have other alternate forms of transportation? Am I actually driving nearly as much as I used to? Like? Do we need to

be a two car family? Could we be a one car family? If you start to ask these questions, you might find that your need, or like the need you thought you had for to buy a new car, goes away completely. That's right. You might just discover that it was in fact a want. So you want to make sure that the car that you're buying, you know, works for your family and your lifestyle, but you also want

to make sure that it fits with your budget. And a good rule of thumb that we've come up with that makes sense to us is that if you combine your net worth with your annual salary and then you take ten percent of that total, well, we feel that that is how much car that you should be able to afford. So, for example, let's say that you're in

your twenties. Maybe you've got twenty five dollars in student loans still, but you make a hundred thousand dollars a year, so that gets you to seventy five thou right, so you should be looking at a car that costs around seventy dollars. I think a lot of folks listening right now they're not gonna like this formula, but we feel

that this is a good practice. We think this is a good method, a good rule of thumb in order to spend less on vehicles, spend less on expenses that don't need to cost so much, and instead funnel that money towards long term investing. Uh So, another example, maybe you're in your thirties. Let's say you've got some assets, You've got a hundred thousand dollars in retirement, maybe you make a hundred and fifty thousand dollars. Uh And so for you, if that's your situation, that means you can

afford a twenty five dollar car. I'm pretty sure we're gonna get some pushback from a lot of people who have vehicles that cost more than maybe what this little formula would allow them to purchase. But again, we think that this is if you are able to sit down with some easy, simple back of the napkin math, we think that this is going to get you within the range of what we think is financially responsible, especially as you are seeking to pursue something like some financial freedom

or financial independence. I've always like to go even more stringent than this rule for myself, because my goals for my money are not support into a two B transportation. So it all depends also on how you think about cars, and so for us, we're saying we don't prioritize it

them all that heavily. And you're listening to a podcast about personal finance, so of course we are going to try to persuade you to think similarly to the way we think when it comes to your money, and how more of money should be going towards investing so that you can grow it, not towards a depreciating asset totally. And let's let's keep talking about like what you need

to do when it comes to to researching that. Certainly you need to research your budget how much you can afford, but then you also need to look into the reliability of the car that you want. That's one of those things that you want to assess before you start hitting up used car lots or scouring Craigslist, and so, yeah, does does the car that you want actually tend to

hold up over time? You've talked Matt many times on the podcast about your the car you drove in college and how it was not very reliable and how I ended up costing you a lot of money because of that. So it's not just the sticker price to the car, but it's how much you're gonna be putting into it. Along the way. It's probably the least reliable vehicle and most expensive to have service yea, and Consumer Reports consistently ranks it as like one of the least reliable vehicles.

We're talking about I had early nineties land Rover range Rover. Yes, so there you go, yep. Yeah, and so if you if you eat, I'll be on a beautiful dope car. Yeah. However, if when you're looking at the money, it doesn't make any sense. They look great, they cost you a lot of money. So you know, we place a high importance on on reliability as a metric when buying the used car, and some brands consistently perform better. But but be sure to check into the specific year, make, and model because

reliability varies over time. You might find that the two thousand nine model was not so great, but the two thousand eleven they had improved it quite a bit, and so you're just gonna kind of want to dig into those details. Checking the reliability rankings can be helpful when it comes to ensuring that you're not buying, you know, a car that's gonna present a lot of issues once

it's yours. Like you're talking about maintenance costs, but that's something else that you want to factor in, because that might be one of the reasons that you would prefer to go with a new car, right you don't wanna have to deal with the hassle or the cost of going to the mechanic. But the truth is that what you'll pay to maintain a used vehicle, if you've been savvy as a consumer, it really isn't all that much. The average ten year old car cost just over fos

to maintain every single year. Uh, you're gonna pay less than one year owning and driving a used car than just what one monthly payment would cost you on a one So keep that in mind. Oftentimes we overblow maintenance costs, but in reality it is much much less. That's right, man. I think we we often overestimate the amount of money that we're gonna spend fixing up the old car that we have. We're like, that's just gonna be a money pit. But when you look at the numbers, that's just not true.

That a ten year old car is actually is gonna cost you a whole lot less, and it's also actually gonna be for the most part, reliable. Obviously, you want to make sure that you find a used car that's more reliable than just the average one. But let's let's just talk about how we feel about new cars. And I'm sure people can infer at this point that we're not big fans, that we don't usually push people in

the direction of buying a new car. And we already talked about how pricey new cars are, how they're there's so much more expensive than used ones. Although there are some cases when buying a new car isn't the worst

thing that you could do. Actually, I wrote an article on our site about when it might make sense for some folks to buy a new car, And so if you're the kind of person who's up for keeping the same car for at least a decade, then I would say buying new isn't a terrible idea if you're like, listen, I want to know what's wrong with it. I don't want to chance it to a previous owner. I want to make all these decisions for this car. But I'm gonna own it for a long time. I think that's

a different situation. And if you're in money year number seven, basically, if you've reached this point of financial independence, and I feel like this is a splurge that you can make. You can afford to buy a new car at this point, because it's basically it's a drop in the in the bucket compared to your overall net worth. And yeah, for for most folks that we would say, it's still a bad financial move. And it's an even worse financial move

if you're looking to buy a new luxury car. And and that is because of like what you mentioned, Matt, with the rising ev adoption, you stay to lose even more money now buying, especially a luxury gas powered car, because those are going to depreciate I'm predicting more quickly in the coming years because there's gonna be so many great luxury evs that people are gravitating towards. Absolutely, dude, Yeah, I mean, and those are the ones that we're really seeing,

Uh stand out. Have you seen pictures of the lucid Sedan? Yeah, I think is pure awesome. Note like so it's fancy, look so freaking cool. And you know another thing too, like you can buy a nice used car and it doesn't have to cost an arm and a leg. Consumer Reports they always make a like these great lists of the best used cars to buy under a certain price point, and so we'll make sure to link to their their list of I think they've got a list of best

used cars that's under ten thousand dollars. We will make sure to put that in our show notes for this episode. But don't think that just because the average price of a used car is that thirty thou dollars, that you have to come even close to that number, because you don't. Yeah, I think so. I think we we benchmark against that number. We're like, all right, I'm gonna go I'm gonna go super cheap and I'll buy something that's twenty five thousand.

It's like, no, you don't even have to do that or even or even just like worse than that, right, subscribing to the average and saying, all right, I guess you know, we're gonna shoot for something around thirty thousand dollars. Maybe we'll even go a little bit above average because we're unique, special, we're treating ourselves right, well, I think yeah. Another question that comes up when people are buying a used car is what about certified pre owned? Is that

the best way to go? Does? And I think a lot of people instantly assume that if it's a certified pre owned vehicle that it's been taking care of so much better, or it is, of course it's worth the extra a few thousand dollars that the dealership is trying to charge for that. I mean, they told me there was a one thousand point inspection on that vehicle, so it must be worth the price that they're asking for. You will give yours the ten thousand points. It's like,

what do these points mean? Right? Exact meaning anything anymore? But we would say not all CPO designations are made the same, like a different dealerships take a different tact towards what that means. And like I was saying, you're gonna pay a good bit more for any certified pre owned vehicle, So if you're looking to find the best value, that's not the best route to take. Whether you go certified pre owned or not, we still want you to have that car inspected by a mechanic that you trust.

Because yeah, we're not completely against certified pre owned as a designation, but it's not a silver bullet for buying used cars. It's not like, all right, if I go in that direction, I'm not gonna have any headaches. That is, that is not the case, that's right. Uh, And so we've talked a lot. There's been a lot of lead up to actually buying a vehicle. But after the break we're gonna get to how you can actually make that purchase.

All right, Matt, I feel like we've been long winded as far as there's been a lot to talk about when it comes to buying a car. But it is is fun, Yeah, it is. I think it's fun. I think it is too, I mean, and I think that's awesome. Times why folks end up spending a little bit more on their vehicles because it's just something, you know, we say that, oh, it's just transportation from point A to point B, but it is. It's got this other thing wrapped up in it, right, and it causes us oftentimes

to spend more than we know we should. Well, and we've all got non negotiables when it comes to what we want in a car, and that is okay. It is okay to have some standards. Like for us, once we had our third kid, it was it was the the power soutomatics. Yes, we're like, we're not getting but we were able to find literally a five thousand dollar Honda Odyssey, a couple of years ago that had that feature, and it had some other things that we weren't even expecting.

We're like, wow, they made them really nice into other six Like I was, I was shocked that they had that many features back then. But there have to be some things that you're willing to say no to in order to save money, right, That's kind of life is a series of trade offs. And yeah, if you want to be able to invest more of your money, well then buying a cheaper vehicle is one way to help

you do that. But enough about that, let's start discussing how to go about buying and let's maybe start with talking about financing a car and our thoughts on that, let's do it all right, Well that basically our advice is don't do it. Don't do it. End of discussion, And yeah, do you have any more points? Well, basically just that you know, we've seen a massive amount of inflation in used car and new car prices, that those have been the leading edge of some of those inflationary

numbers that we've been seeing. And in normal times, though, cars are a depreciating asset and so we prefer for you not to finance something that's quickly going to depreciate in value. We would say, save up, pay cash. Is it incredibly easy to save up ten grand, twenty grand or more even to buy that car you want. No, it's not easy, but it's the best move money wise. And so not everyone agrees with this. I know some

people think, well, what's the big deal of financing a vehicle? Well, we would say, yeah, you can always buy a solid used car in that five to price range, and so we would say that's where you should opt instead if you don't have the cash on hand in order to buy the more expensive car that you really want. All right, so now that you know our stance right that we would prefer you to pay cash for a car, please please please pay cash for your car. But are you

begging now? Yes? Uh? But the thing is, like, I know, not everybody is going to listen to us, and so if you do decide that you don't want to listen to us, you're gonna be you and you are going to take out a loan. We want you to be smart about it. We don't want you to become a payment buyer where you are only focused on the amount that you're paying every single month. When you have to

make that car payment. So many, so many people, they focus on the payment that they're gonna pay, and they're willing to stretch out that car loan and definitely is essentially to make that car payment make sense for exactly. Yeah, we want you to keep the length of your car loan reasonable, like around thirty six months, because that would ensure that you aren't buying a car that you can't afford.

Because yeah, if you if you do have to stretch that out to something like seventy two months or even more in order to buy the car that you want, you need to go back to the drawing board and you need to pick another car or something that you can afford. If you don't do this, you are setting

yourself up for potentially big financial problems. If you finance a car over a longer period of time, that's when you might end up only more on the car than it's actually worth because it's been years since you actually purchased the day things right, then you get in an accident and you're you're underwater, and that puts you in

a bind financially. And so the other thing too is where you get financing matters, right, This could be the difference between an interest rate of like two and a half percent or twelve percent or even bigger, and the app could be even larger, and that's going to impact your monthly payment as well as a total amount that you pay an interest over the life of that loan.

And so instead of just going to a lot, a used car lot, and buying that car there and financing it as well, the best thing to do, and the simplest thing to you, is to check with your local credit union before you head out to go shopping. Get a proof for alone there before you start to look around for vehicles. But again we would say skip all this hassle and just pay with cash. That is by far the best method. But if you are going to finance your car, make sure that you're getting that financing

from a local credit union. That's where you're gonna get the best rates and that's gonna save your money over time. But again again, forget all that and just pay cash. Pay cash. All right, let's keep moving. Let's say you found your car. It's adorable, uh, and you can easily afford it. That's great, right. What is next is that you need to run a vehicle history report on a site like Carfax. You want to make sure that you are getting it checked out. That's gonna tip you off

to the history of the car. It's gonna let you the previous ownership, any accidents that may have occurred, and then after that, you actually want to get it checked out by an independent mechanic before you purchase it. This is one of those instances where you gotta do something. You know you should do it, but you're going to be so tempted to skip the step because it's going to require some extra legwork from you. If you're body from CarMax or Carbonna, you can go ahead and buy

it because of that seven day return window. That's something I was able to take advantage of when we purchased our Odyssey from Carbona. I had plenty of time to go get that checked out at a Honda mechanic and he was able to discover that that timing belt needed to be replaced, and that was something that carbon A covered for me. So again, that's one of the advantages for some of those big sites like that. But if you're buying from a private seller, this needs to be

a condition of the sale. You need to have worked out ahead of time. That you have the option or the ability to go and get this thing checked out. You know that the pain job might look sweet, but you want to make sure that you aren't buying a

money pit. Yeah, for sure. I've done that many times, Matt taking that car to my mechanic and sometimes he's like, Yep, it looks great, you should buy this, And other times he's like, oh, not so much, and I have to say bye, thank you, but I'm not going to purchase your car. And one other thing I think that makes sense in today's climate that's worth stressing when you want to find a good deal on a used car is that it might even make sense to fly somewhere to

buy the car that you want. That might sound strange, It's like, well, aren't there plenty of used cars right near where I live. Well, yeah, but it's similar to real estate pricing dynamics fluctuating different parts of the country, and supply chain issues might mean you've got to get on a plane to get what you want at the same time. But but even before the supply chain issues, Matt, I had a friend looking to buy, of course, a Honda Odyssey, just like just like you and I drive.

She found that the best deal was on a van down in Orlando, Florida, and so she flew down, she bought it and drove it home. That's small inconvenience saved her a couple of thousand dollars. And so I would suggest if people expand your car search beyond the town that you live in, if you want to save even more.

You know, it's not it's not necessarily going to always be the best move for you, but especially if you can fly to a city where the plane ticket is gonna cost you bucks and the gas on the way back is going to cost you another hunter bucks, but you can say fift ndred on the price of the car, then that flight is going to make sense for you. That's right, and then you can binge listen to how the money all the way from lucky you at two

x speed. One other thing to mention, given the pricing insane the in the car market these days, it just makes a lot of sense to hold off as long as you can before upgrading your car if you've determined that you do need to replace it. Timing matters now more than it normally does, because we believe that prices are going to come back down to earth. But the car market isn't going to get sorted out instantly, right,

It's gonna take an overtime. And so if you can wait until either you know, later this year, even wait until three, that is likely going to ensure that you aren't paying an inflated price due to the supply chain and chip issues that we mentioned earlier, right, And ultimately, when it comes down to it, Matt, we want how the money listeners to build wealth. And it's not that we want you to drive the crumbiest card that you

absolutely hate. It's not punishment exactly that that is not what we want either, like I really like my two thousand and six hond Odyssey. We just want what's best for you, for future you, not for right now you. And going back to kind of what we said earlier, if you can reframe this choice and you can say, look, it's allowing me to live my life even more fully in these other areas because it's allowing me to reach

that goal of financial independence even quicker. It's giving me greater choice in what I do with my day to day when it comes to my job. Like we would say, wealth is the fancy car that you don't drive, and so yeah, if you want to build wealth, I've got fancy cars. They're parked in the garage of Marathaira. Those are future fancy cars that I could potentially buy, right And so, yeah, you're listening to How the Money because you want help building wealth, not because you want to

buy a the fanciest of the fancy cars. And some of our listeners do like cars more than others. And again that's okay, do your thing. You don't have to do it exactly the way we do it. But yeah, if you really want to build wealth, if that's you know, one of your top tier goals, you'll be more willing

to drive something that doesn't look as pristine. You'll be willing to forsake some of those finest amenities or the fanciest new touch screen in your car in order to drive something that's going to help you reach that goal

of financial independence more quickly. You might be able to recognize, just like I can, just like Matt can, that the new Rivians are the best looking truck ever made in this world, and that you absolutely really really want one, but at the same time say, Nope, not going to do it, because my other goals are more important for

the time being, that's right. One of the thing real quick, the most popular cars for wealthy folks, this is according to the Millionaire next Door are Toyotas and Honda's so cameries and handah accords like these are the top pick for folks who have a million dollar net worth. The majority of those people aren't driving luxury vehicles, and so it comes down to the question do you want to

look rich or do you want to be rich? The car that you drive has a lot to do with that eventual outcome, and that's why we want you to buy cars the right way. Yeah, so hopefully that was helpful. And Matt, I think one of the things we mentioned before too is if you have an extra car sitting around, now it's a great time to sell it. Now, it's

a great time to actually maybe rethink. If you're driving two nice of a car and you're like man, Matt and Joel, they just they just kind of got got under my skin, and now I want to do something and maybe get rid of this car payment, or find a way to drive something that's even cheaper. Well, selling one of your cars and becoming a one car family, or or downgrading to something cheaper and taking that extra cash so that you can stock it a way for

your future. Now it's a perfect time to do that, take advantage kind of of the current market dynamics and save you some money. And actually, I just realized we did an entire episode dedicated to becoming a one car family. I just looked it up on my phone two forty two. That's episode two forty two if you want to be swayed even more to becoming a one carr family. And we recorded that while I was while we were a two car family. And shortly there after that's I took

my own medicine. Oh, I love it, and we became a one car family. And so hopefully, maybe maybe this episode will help push some people in that direction. To all right, let's quickly mention the beer that we enjoyed during this episode. You and I enjoyed a Pothole City, which is a rocky road stout by Pipe Works Brewing Company out of Chicago, Illinois. What were your thoughts on this one? Bud? All Right, I'm gonna say chocolate marshamallowy.

It was a perfect winter beer, Like It's a good deep dark stout like this is very dark beer perfect for these like cold winter months. Yeah. Absolutely, Yeah, it was, dude. It was super toasty and like roasty um. You know, I was I was totally picking up some of those marshmallow vibes. But it wasn't like the fresh out of the plastic bag marshmallow. It was like like a dark brown, maybe two charred marshmallow, like like you're getting like you're

doing some smores like it. It had like some of that bet on a fire for a minute and you're like, oh, shoot, can you like blow it out real quick? But it had some of those bitter notes going on, but it provides that balance when you have when you've got that multi sweetness going on, you need some of that roasty bitterness to kind of bounce it out. Otherwise you just have this pure dessert beer, which isn't always gonna fly

with folks. So I'm glad you and I got to enjoy this one Pothole City by Pipe Works Brewing, no doubt. All Right, Matt, Well, that's gonna do it for this episode. For listeners who want show notes links to some of the articles we mentioned in this episode, go to our website how to money dot Com. You'll find them there. That's right, buddy. So until next time, best friends out, best friends out,