Both Shane and Shawn take home the exact same amount of money. They both SPEND the exact same amount of money on everything except for one thing: The car they drive.

Shane buys new cars and has about the average new car payment of $750/month. Shawn buys new cars in cash. His $250/month goes into a high yield savings account. Six years later he has saved $18,000 in his car fund. $2,000 that he’s spent over the years on a few repairs to keep his car in tip top shape. Then he sells the car he bought 6 years earlier (direct to a buyer, not a dealership trade-in) for $8,000. That gives him $24,000 to buy a really nice used car that will easily last 6 years.

Is that as easy as waltzing into a car dealership and driving out with a brand new car. No, it takes slightly more work and planning. Is it worth it to become a multi-millionaire over your career? In my opinion, yes.

For those bros in the comments who say “LOL WHO WANTS TO BE RICH WHEN YOU’RE SO OLD”. That’s fine! Burn all your money on new car payments and stay broke your whole life. But in addition to being broke in retirement, you’ll also be stressed every day until then living paycheck to paycheck with no investment cushion to fall back on. I’m just showing you the paths, you can choose which one to take.

Is this a post about cars? Not really. The budgets could have differed in any way you want. In this example, Shawn decided he didn’t care much about the car he drove so he cut back there. But you can make that decision for your own life. Maybe it’s housing, or eating out, or those online shopping sprees that you treasure or not. Just make sure to put a significant chunk into that investing bucket first, then fill up the rest with what’s most important to you.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy

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By: Gabriela Gonzalez
Title: Is it really worth spending money on new cars?
Sourced From: www.personalfinanceclub.com/is-it-really-worth-spending-money-on-new-cars/
Published Date: Tue, 01 Oct 2024 22:40:37 +0000

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