RPF0255-Repair_or_Replace_Car
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00:00:29.860 | (upbeat music)
00:00:32.460 | If you've ever been faced with a major car repair,
00:00:36.200 | or even worse, a bunch of ongoing car repairs,
00:00:39.900 | and sat there and said to yourself,
00:00:41.100 | man, I am just wasting all of my money on this thing.
00:00:44.340 | Maybe I should go get a new car.
00:00:46.300 | Well, I've been there, and a lot of people are there,
00:00:48.940 | and it's not easy to know what to do in that situation.
00:00:52.440 | So today, I'm gonna share with you some thoughts
00:00:55.580 | about how I would answer the question
00:00:57.380 | of when to decide whether to fix your car or replace it.
00:01:02.380 | (upbeat music)
00:01:05.500 | Welcome to the Radical Personal Finance Podcast.
00:01:21.340 | My name is Joshua Sheets, and I'm your host.
00:01:23.100 | Thank you so much for being with me today.
00:01:24.900 | Today, we're gonna talk about cars.
00:01:27.140 | Probably the ultimate whipping post
00:01:29.300 | of the personal finance industry.
00:01:30.980 | We love to get mad about them
00:01:33.140 | and talk about how much money we spend on them,
00:01:35.240 | but they're kind of important.
00:01:37.420 | And I'll tell you, I've struggled with this decision,
00:01:40.420 | struggled to figure out how to give you good advice,
00:01:41.980 | so take my advice today, test it,
00:01:44.500 | and then let me know what you think.
00:01:46.300 | (upbeat music)
00:01:48.880 | Specifically today, we're gonna pull apart this question,
00:01:54.780 | and this is a question
00:01:55.620 | that has always bothered me a little bit.
00:01:56.900 | I like to have a framework for most decisions.
00:01:59.060 | If I can ever create one,
00:01:59.940 | I really like to have a framework for financial decisions
00:02:03.340 | that will give me the opportunity
00:02:04.840 | to be able to know what to do in most situations.
00:02:08.240 | But the question of what to do when your car breaks
00:02:10.020 | is not an easy question to answer.
00:02:12.380 | It's really, really not.
00:02:13.860 | And I've heard various pieces of advice,
00:02:16.220 | but even on this subject,
00:02:18.740 | there's not a continuity of advice.
00:02:20.380 | Probably, I guess, the only major piece of advice
00:02:23.020 | that I have often heard is the idea
00:02:25.340 | that if your car gets to the point
00:02:26.740 | where the cost of repairing it
00:02:29.900 | is gonna be more than half of the value of the car,
00:02:33.380 | then you should replace it.
00:02:34.360 | But even there, where does it come from?
00:02:36.420 | It's always really, really bothered me.
00:02:37.640 | So I'm gonna share with you some thoughts
00:02:39.100 | about how I approach a situation,
00:02:40.940 | and I hope it can be helpful to you.
00:02:42.660 | Because for many people,
00:02:45.820 | having a car that's either broken down
00:02:48.060 | or is continually breaking down,
00:02:50.420 | that can lead to a major, major financial mistake,
00:02:55.500 | where they go out and buy a new car.
00:02:58.140 | So we're gonna talk in detail about that.
00:03:00.060 | Before we do, a couple quick announcements.
00:03:01.220 | Number one, this is episode 255 of the show.
00:03:05.140 | Episode 254 was an interview with J.D. Roth
00:03:09.140 | from Get Rich Slowly.
00:03:10.900 | And I would recommend to you
00:03:12.140 | that you check that out in the feed if you haven't heard it.
00:03:14.580 | I made a mistake when I was publishing that show,
00:03:17.140 | and I set the date wrong.
00:03:18.420 | So for many of you, it showed up like a week in the past,
00:03:20.860 | but I've fixed that.
00:03:21.900 | So if you are just tuning into this show
00:03:24.560 | and you didn't hear or see the episode with J.D. Roth,
00:03:27.380 | go back and check that in the feed
00:03:28.460 | and download and check that out.
00:03:30.020 | Also, let's talk about sponsors right up front today,
00:03:32.220 | and let's do this quickly today.
00:03:33.360 | Sponsor of the day number one
00:03:34.260 | is Patrick Snow, the publishing doctor.
00:03:36.900 | Patrick is my personal publishing coach.
00:03:39.180 | He's been on the show.
00:03:40.020 | If you'd like a full introduction to him,
00:03:42.540 | go back and listen to episode 252 of the show.
00:03:46.220 | And there you'll have an hour-long interview
00:03:47.740 | where we talk about publishing,
00:03:49.180 | publishing a book, and why you should consider it.
00:03:53.540 | The statistics indicate that many, many people,
00:03:55.960 | at least 80%, about 80% of the population,
00:03:58.800 | would like to publish a book.
00:04:00.160 | And in terms of your career and enhancing your career,
00:04:03.980 | publishing a book can make a huge, huge difference
00:04:06.660 | in your overall marketing plan.
00:04:11.180 | So definitely would recommend that you consider it.
00:04:13.620 | Patrick is an expert in this area,
00:04:15.620 | and he's got a tremendous wealth of resources
00:04:18.740 | to guide you through the whole publishing process.
00:04:20.940 | I have found and am continuing to find his information
00:04:24.500 | and content to be extremely valuable for me
00:04:27.180 | as I work toward the publishing of my own book.
00:04:30.540 | So check out his information.
00:04:32.340 | You can go to his website at thepublishingdoctor.com,
00:04:35.220 | thepublishingdoctor.com.
00:04:37.020 | If you are interested in checking with him
00:04:39.340 | and getting some information about the publishing process,
00:04:42.400 | the best way to get in touch with him
00:04:43.580 | is shoot him a text message,
00:04:44.740 | and he will be glad to offer you
00:04:46.980 | a complimentary 30 to 60-minute consultation
00:04:49.980 | on the publishing process.
00:04:51.740 | He can hear a little bit about your story,
00:04:53.380 | hear a little bit about what you're doing,
00:04:54.980 | and give you some insight and some ideas that would be helpful.
00:04:58.100 | Best way to schedule that is text him at 206-310-1200.
00:05:03.100 | 206-310-1200, and that info will be in the show notes.
00:05:10.020 | Sponsor of the day number two is Paladin Registry.
00:05:12.420 | Paladin Registry is a service that I went out
00:05:14.780 | and looked for in an effort to respond to your requests
00:05:19.380 | about how to find a good financial advisor.
00:05:22.300 | And Paladin Registry is a service where they come together
00:05:25.260 | and they vet financial advisors.
00:05:27.180 | A lot of information that you should know about that.
00:05:29.020 | Please go back, if you haven't heard it,
00:05:30.500 | and listen to episode 248 of the show.
00:05:33.260 | That is an hour-long interview
00:05:34.320 | with the founder of Paladin Registry, Jack Waymire,
00:05:36.540 | and in that show, we talk in detail
00:05:38.500 | about the need for a registry service
00:05:40.340 | and how they screen advisors, et cetera.
00:05:43.140 | So start by listening to that show,
00:05:44.820 | and then go to the Paladin Registry link
00:05:47.980 | at radicalpersonalfinance.com/paladin, P-A-L-A-D-I-N,
00:05:52.980 | radicalpersonalfinance.com/paladin.
00:05:54.980 | And if you are interested
00:05:56.020 | in potentially interviewing financial advisors,
00:05:59.780 | put your info in there, and they will do their best
00:06:01.540 | to connect you with a few different advisors
00:06:03.580 | in your neighborhood that they have screened and vetted.
00:06:05.900 | And hopefully those will be a good place for you to start
00:06:08.480 | as you interview advisors for their ability to serve you.
00:06:11.500 | So radicalpersonalfinance.com/paladin.
00:06:14.620 | All right, let's talk about cars.
00:06:16.140 | So many of us are gonna be in this place of decision
00:06:18.660 | at some point.
00:06:19.500 | If you own a car (laughs)
00:06:20.940 | and you haven't been there in the past,
00:06:22.320 | you're gonna be there in the future.
00:06:23.340 | And I've really, really struggled with that,
00:06:25.940 | trying to figure out how do we design a framework
00:06:29.020 | for the decision?
00:06:30.180 | And I haven't been able to come up with a perfect one,
00:06:32.500 | but I do have some thoughts.
00:06:33.620 | And I'll share with you a story
00:06:34.780 | because this really happened to me,
00:06:36.580 | what was it, earlier this year.
00:06:39.980 | And I wound up in the scenario,
00:06:42.580 | the Sunday morning I had loaded up my family,
00:06:44.800 | we were getting ready to leave the house on Sunday morning
00:06:47.140 | to go to a church meeting.
00:06:48.260 | And I go out, start the car, and there's a big squeal,
00:06:51.360 | and all of a sudden it starts making some weird noise.
00:06:54.100 | Well, I turn the engine off, I get out of the car,
00:06:56.140 | I go up and check and look down,
00:06:57.900 | and I can see immediately that the belt had come off,
00:07:00.020 | and I could see immediately that there was a piece broken.
00:07:03.580 | Cutting right to the point that matters,
00:07:06.760 | a few days later, got the car towed to a mechanic.
00:07:09.100 | I was faced with a $2,500 repair bill.
00:07:13.100 | And what had happened was a pulley
00:07:15.960 | on the side of the engine had broken.
00:07:17.780 | And the way that the engine is constructed on my vehicle,
00:07:22.780 | there's a piece of aluminum,
00:07:24.100 | and the whole thing had broken off.
00:07:25.160 | So the whole side of the engine had to be replaced.
00:07:27.020 | And basically, in order to accomplish that repair,
00:07:30.940 | you practically had to take the whole engine out of the car.
00:07:32.580 | So it was extremely labor intensive.
00:07:34.560 | Called around for different quotes to the dealerships,
00:07:36.640 | called around to a couple of mechanics,
00:07:37.920 | and the cheapest I could get through it
00:07:40.040 | was with about 2,500 bucks.
00:07:42.740 | 2,500 bucks is a lot of money to be spending
00:07:47.220 | when your car is not worth very much money.
00:07:50.660 | I bought the car a few years ago for about 5,000 bucks.
00:07:53.840 | And when you're sitting there trying to say,
00:07:55.300 | "Should I spend 2,500 bucks on repairing a car?"
00:07:58.900 | That is a difficult, difficult thing to decide.
00:08:01.860 | And so I faced this personally.
00:08:04.580 | Ultimately, I wound up repairing the car.
00:08:07.380 | But we're gonna talk about that,
00:08:08.380 | and I'm gonna walk you through my thought process.
00:08:10.420 | Because this is the time to think through
00:08:12.620 | the questions so that when the situation hits,
00:08:15.460 | you'll be better prepared to know what to do.
00:08:17.840 | The time to think through difficult situations
00:08:20.620 | is always in advance.
00:08:22.740 | It's really tough when you're faced with the emotions.
00:08:24.940 | Maybe you don't have a lot of money at that time,
00:08:27.020 | and then all of a sudden you're in the thick of it.
00:08:29.400 | Really tough to think things through rationally
00:08:31.340 | at that point in time.
00:08:32.580 | It's easier if you've thought through
00:08:34.340 | the difficult situations in advance,
00:08:36.260 | so that you're prepared mentally
00:08:39.760 | for that difficult situation.
00:08:42.680 | So, what do you do in that situation?
00:08:44.980 | Car's broken down.
00:08:47.440 | Well, to begin with, remember the concept
00:08:49.740 | of zero-based thinking.
00:08:51.280 | Zero-based thinking means everything
00:08:54.120 | that's happened in the past, once your car breaks,
00:08:56.440 | everything that's happened in the past is irrelevant.
00:08:58.600 | Those are all sunk costs.
00:09:00.060 | So if you are in the unfortunate situation
00:09:03.440 | where you've made a $1,000 repair on your vehicle,
00:09:07.560 | and then a month later it breaks again,
00:09:09.640 | and now you've got another $1,000 repair,
00:09:11.600 | you've got to ignore the first $1,000,
00:09:13.920 | because it's gone, it's a sunk cost.
00:09:17.480 | You can't recover that money no matter what.
00:09:19.400 | So every time the car breaks,
00:09:21.120 | you've got to face it afresh,
00:09:23.820 | and ignore the things that have happened in the past.
00:09:26.020 | This is really difficult to do,
00:09:27.020 | because we're wired as human beings
00:09:28.800 | to think about all those past decisions
00:09:30.600 | again and again and again,
00:09:31.600 | and kind of bring the weight
00:09:33.800 | of all of those difficult circumstances
00:09:35.640 | to our present decision.
00:09:37.100 | But it's a major logical fallacy.
00:09:39.000 | You've got to avoid that.
00:09:40.160 | So you've got to begin with zero-based thinking,
00:09:43.480 | and start with a fresh slate.
00:09:45.360 | Take it with the current decision,
00:09:48.060 | the current repair,
00:09:49.120 | and figure out what do you actually do now,
00:09:51.960 | and make a fresh decision.
00:09:53.740 | Every single breakdown or repair is a fresh decision.
00:09:57.640 | You've got to do your best to ignore the emotion
00:10:01.480 | of the feeling of, I've been at the mechanic too much,
00:10:03.540 | these things have just piled up,
00:10:04.720 | and this car is always breaking down.
00:10:06.560 | This accounts for one of the major, major financial mistakes
00:10:09.600 | that many people wind up making,
00:10:11.960 | where the emotion of a vehicle
00:10:14.080 | that breaks down several times over several months
00:10:16.960 | starts to wear on them.
00:10:18.280 | And that emotion kind of chips away, chips away,
00:10:20.880 | chips away, chips away, and over time,
00:10:22.280 | it just gets heavier and heavier and heavier
00:10:24.240 | with that feeling.
00:10:25.240 | And as it wears on you,
00:10:28.300 | you wind up in a situation
00:10:29.680 | where finally many people just simply snap.
00:10:32.340 | And when they snap, they say,
00:10:36.280 | I've had it with this old clunker,
00:10:37.800 | trot down to the dealership,
00:10:39.160 | buy another car really quick,
00:10:41.000 | and they often make poor decisions.
00:10:43.680 | Many times those poor decisions then follow them
00:10:47.200 | for months and years and really hamper their progress.
00:10:51.740 | This course of action is not for you.
00:10:55.800 | I recommend you think about it now
00:10:58.200 | so that you don't do that.
00:10:59.500 | When you're looking at the situation of your car repair,
00:11:02.720 | focus on the actual facts.
00:11:05.040 | And this is where you need good records
00:11:06.880 | and you need good facts.
00:11:08.440 | Check your records and find out
00:11:10.360 | how much you're actually spending on the car.
00:11:13.680 | If you don't have good financial records,
00:11:16.280 | what'll happen is you'll spend 50 bucks here,
00:11:18.400 | $100 repair there, $287 there,
00:11:22.660 | and it'll feel mentally like thousands of dollars.
00:11:27.660 | But if you can just simply go back
00:11:29.140 | and check your financial records
00:11:30.320 | and find yourself in a position where you can check,
00:11:35.280 | you realize, oh, I don't actually have that much.
00:11:38.080 | If you have those good records
00:11:39.280 | and you can go back and check,
00:11:40.240 | then you can actually know the facts.
00:11:42.120 | So nickel and dime repairs, if it's ongoing repairs,
00:11:45.160 | they're emotionally draining,
00:11:46.280 | but they're not necessarily financially draining.
00:11:48.240 | Just pay attention to the actual facts.
00:11:51.000 | Always begin, if you're in a situation where the car's broken
00:11:53.460 | with getting the best understanding
00:11:55.760 | of the diagnosis of the repair and the potential costs.
00:11:58.760 | Try to get accurate information.
00:12:01.080 | Good rule of thumb with any decision
00:12:03.040 | is the more information, the better,
00:12:05.420 | and the slower the decision, the better.
00:12:08.080 | Anytime you can push off a decision,
00:12:10.280 | especially a spending decision,
00:12:12.000 | just a little bit longer,
00:12:13.240 | buy yourself a little bit more time
00:12:14.840 | to think through, research, care for things,
00:12:17.440 | you'll almost always make a better decision.
00:12:20.040 | There are exceptions to this rule.
00:12:21.200 | There might be, maybe, might be some types of opportunities
00:12:25.840 | that you need to jump on quickly.
00:12:28.320 | But those opportunities should be
00:12:29.920 | within your area of expertise.
00:12:32.800 | For example, you might be an expert investor,
00:12:34.680 | and if there's a company that,
00:12:36.220 | or a piece of real estate or something like that
00:12:38.020 | that you know a lot about
00:12:39.060 | and you just gotta buy right now,
00:12:40.460 | then go ahead and move quickly.
00:12:41.700 | But if you don't actually, if you're not an expert,
00:12:44.520 | buy yourself more time.
00:12:46.700 | More time, more time, more time is always a good rule.
00:12:49.440 | Pushing off almost all spending decisions
00:12:51.860 | is generally helpful.
00:12:53.240 | So with car repairs, try to buy yourself more time,
00:12:55.500 | do more research, get another opinion,
00:12:57.220 | and get accurate data.
00:12:59.760 | Try to get an understanding, is this a maintenance item
00:13:02.300 | or is this truly a repair item?
00:13:04.940 | All cars are gonna have maintenance items.
00:13:06.580 | Doesn't matter whether they're new cars or they're used cars,
00:13:09.260 | all cars have maintenance items.
00:13:11.260 | And so one of the mistakes that people can make
00:13:13.500 | is they might have a number of maintenance items
00:13:15.180 | that all occur in a bunched together time period.
00:13:18.660 | They need new tires,
00:13:19.780 | then they need to replace the timing belt,
00:13:21.580 | then the alternator breaks,
00:13:23.340 | and then they gotta get a new battery.
00:13:24.700 | And they're looking at this thing getting so frustrated
00:13:26.780 | saying, "I've just spent $1,100 on this car,"
00:13:30.240 | when every single one of those things
00:13:31.620 | are simple maintenance items.
00:13:33.900 | They're not a catastrophic breakdown,
00:13:35.280 | they're not an indication that the car
00:13:36.820 | is somehow falling apart and has to be replaced,
00:13:39.100 | that's just normal maintenance.
00:13:40.700 | And all vehicles are gonna require normal maintenance.
00:13:43.500 | So even if you go and get another car,
00:13:44.900 | your problem is not solved.
00:13:46.020 | You still have to deal with the normal maintenance
00:13:48.420 | of that new car.
00:13:49.700 | The really catastrophic breakdowns are rare.
00:13:53.380 | They're very rare.
00:13:54.600 | They do happen, but they're rare.
00:13:58.380 | My car, the repair I described to you,
00:14:00.720 | that was a catastrophic breakdown.
00:14:02.560 | The vehicle was unusable unless I spent
00:14:05.400 | the $2,500 on fixing it.
00:14:07.520 | And I did my research, I could not find any way
00:14:10.120 | to get the repair for cheaper than that.
00:14:11.800 | So it was either spend the $2,500
00:14:13.960 | on the catastrophic repair, or the car's unusable.
00:14:18.160 | But that's really rare.
00:14:20.200 | Engines don't usually blow up.
00:14:22.340 | Transmissions don't usually just fall apart.
00:14:25.240 | And those are the two major components of the vehicle
00:14:27.600 | that are gonna actually experience
00:14:29.640 | those catastrophic losses.
00:14:31.240 | Most of the other things are just simple maintenance items.
00:14:33.480 | So don't let the maintenance items
00:14:35.160 | get you down emotionally.
00:14:36.560 | They might be starting to pile up.
00:14:39.560 | It might be time to consider a new car.
00:14:42.120 | We'll get to that more as the show develops.
00:14:44.920 | But don't let them get you down emotionally.
00:14:47.920 | As you're looking at your decision criteria,
00:14:49.640 | and you're considering this decision afresh,
00:14:52.720 | do some assessments.
00:14:56.000 | Assess the condition of the car,
00:14:57.960 | and ask yourself, if this car were repaired,
00:15:00.840 | what would be the condition and usefulness of the vehicle?
00:15:04.480 | Assess your needs and figure out
00:15:06.120 | what the baseline decision is.
00:15:08.760 | Anytime you're making decisions,
00:15:09.900 | you wanna start with what is the baseline decision,
00:15:12.540 | and then compare that decision,
00:15:15.240 | decision A, we'll call it, to other options.
00:15:17.840 | Decision B, decision C, decision D.
00:15:20.040 | So the example here, if you were actually considering
00:15:23.240 | purchasing another car, your baseline decision,
00:15:26.720 | usually, if you have a broken car,
00:15:28.320 | is gonna be to repair the car.
00:15:29.960 | That's almost always going to be the cheaper option.
00:15:33.280 | So that's gonna be the baseline decision.
00:15:35.140 | If your car was perfectly good yesterday, before it broke,
00:15:38.480 | if the car were repaired,
00:15:40.400 | it would probably still be perfectly good.
00:15:42.640 | So since repairing the car
00:15:44.240 | is almost always gonna be the cheapest option,
00:15:45.640 | let's just choose that as your base.
00:15:48.240 | And then everything is gonna be compared to that.
00:15:50.480 | And you're gonna weigh all the decisions in light of that.
00:15:52.800 | So reassess your needs, establish the baseline decision,
00:15:56.680 | and then start comparing them.
00:15:58.640 | You know the costs, go back and look at them,
00:16:00.660 | and you have an estimate of the repair.
00:16:01.800 | So now we've got a known quality to the car
00:16:05.060 | if we were actually to keep that car.
00:16:06.200 | So that's usually the first decisions.
00:16:08.160 | Now, are there situations in which
00:16:09.520 | you should replace the car?
00:16:10.800 | Yes, probably.
00:16:12.640 | But let me give you some of the major reasons
00:16:14.400 | why you should keep the car
00:16:16.840 | and repair it instead of replacing it.
00:16:19.240 | Number one, most actual repairs
00:16:20.720 | are really not that expensive.
00:16:22.560 | Maintenance items can add up,
00:16:24.080 | especially if they've been deferred.
00:16:26.400 | But they're really, like I said a moment ago,
00:16:28.040 | there are very few major, major repairs
00:16:29.760 | that happen on cars.
00:16:31.620 | Next, worse, it's really hard to sell a broken car.
00:16:36.040 | If your car is actually broken down,
00:16:37.960 | it's very, very difficult to sell that.
00:16:41.480 | You've taken your marketplace of opportunities,
00:16:43.640 | of potential buyers, from this massive marketplace,
00:16:46.560 | and you've broken it down
00:16:47.700 | to just this very narrow window of people,
00:16:50.520 | a very small number of people
00:16:51.960 | that would be willing to take on a vehicle
00:16:53.920 | that has an unknown mechanical condition and fix it.
00:16:56.580 | You're basically dealing with mechanics,
00:16:58.920 | maybe a professional, or a shade tree mechanic,
00:17:02.240 | somebody knows a little something
00:17:03.200 | and they can go ahead and fix a few things.
00:17:05.240 | That's a tiny slice of the marketplace.
00:17:07.400 | And any time you're selling something,
00:17:09.880 | you wanna have the most potential buyers possible.
00:17:12.720 | The more limited the number of your buyers,
00:17:16.080 | the more difficult it's gonna be to sell something,
00:17:17.920 | and the more difficult it's gonna be
00:17:19.360 | to sell something for a really good price.
00:17:21.120 | So it's really, really hard to sell a broken down car.
00:17:24.560 | Tiny marketplace, they're experts,
00:17:26.940 | and they're gonna be investing labor,
00:17:28.720 | so they're gonna wanna deal.
00:17:30.600 | So almost always, if you fix the car,
00:17:33.800 | at that point in time,
00:17:35.120 | if you wanna go out and sell it on the open market,
00:17:36.860 | you can do that.
00:17:37.740 | But you take your potential buyers
00:17:38.940 | from this tiny little subset of people,
00:17:41.480 | and you expand it to a much bigger marketplace.
00:17:46.300 | So it's tough to sell a broken car.
00:17:50.480 | Worse, in general, the biggest cost of car ownership
00:17:55.040 | for most people would be the depreciation.
00:17:57.780 | And when people are sitting there
00:18:01.780 | with a car that is broken down or continually breaking down,
00:18:05.560 | and they're considering, should I replace it,
00:18:07.500 | they're usually thinking about upgrading the car
00:18:11.160 | to a more expensive car.
00:18:12.480 | That's usually the consideration.
00:18:15.840 | It's very rare that somebody is sitting there
00:18:18.120 | with a $5,000 car and saying,
00:18:21.600 | well, this car is breaking down,
00:18:22.720 | so I'm gonna replace it with this other $5,000 car
00:18:25.320 | that's gonna be more reliable and break down less.
00:18:27.740 | If you're making that decision,
00:18:29.920 | then if you can go from equal value to equal value
00:18:33.440 | to a vehicle that's gonna be breaking down less,
00:18:34.740 | that's gonna be a better decision.
00:18:36.280 | But most people aren't doing that.
00:18:38.020 | They're gonna upgrade the car.
00:18:39.440 | So here would be an example from my situation.
00:18:41.240 | I bought my van for 5,000 bucks.
00:18:43.060 | The market value when I bought the van
00:18:44.520 | was about 7,000 to $7,500 for vans of that type of thing.
00:18:48.760 | And I'd shopped a lot, worked aggressively
00:18:50.920 | to look around and find a deal,
00:18:52.280 | and it was a hard deal to find.
00:18:53.920 | Most minivans were stuck right at that $7,000 to $7,500
00:18:56.680 | price range, and then ultimately I found this one,
00:18:59.240 | and it worked out that I was able to get it at a discount.
00:19:01.920 | I moved fast, gave the guy cash.
00:19:03.940 | He wanted to get rid of it.
00:19:04.780 | It was a business owner, and so it worked out well.
00:19:07.440 | I was able to get the deal.
00:19:09.340 | The repair bill, though, was 2,500 bucks.
00:19:11.960 | So if I were to go out and say,
00:19:13.920 | "Okay, I'm just gonna go out and find another van
00:19:17.240 | "at market value," I couldn't be assured
00:19:19.000 | of being able to find another $5,000 deal.
00:19:21.560 | And maybe I could have, who knows?
00:19:22.840 | Maybe I could have found a better deal,
00:19:24.120 | but I couldn't be assured of it.
00:19:25.320 | And knowing how long it had taken
00:19:27.520 | to find that $5,000 deal,
00:19:30.920 | I knew that I needed to,
00:19:33.160 | I couldn't count on being able to find one.
00:19:35.320 | So I'm automatically, to replace like with like,
00:19:39.280 | a van in my current condition
00:19:40.960 | with a van in similar condition,
00:19:44.040 | I'm gonna be moving up to 7,500 bucks.
00:19:47.000 | Now, at that $7,000 price range,
00:19:50.360 | using a 15% estimate on the amount of money
00:19:52.720 | that I'm losing every year on depreciation,
00:19:55.120 | I'm taking a hit of about $1,000 loss
00:19:57.200 | every year that I own a vehicle.
00:19:59.760 | So if I were to go out and buy a $7,000 van,
00:20:02.440 | a year from now, it's gonna be worth six grand,
00:20:04.400 | and I'm gonna be out 1,000 bucks.
00:20:06.080 | That's kind of a pain.
00:20:10.920 | Now, the cool thing is by getting the discounted van,
00:20:14.600 | I've already got more wiggle room in the deal.
00:20:17.880 | So I automatically have to factor
00:20:20.120 | that there's gonna be an additional $1,000 cost
00:20:22.160 | of going out and buying the $7,000 van.
00:20:24.640 | Now, most people, and I wouldn't necessarily,
00:20:27.040 | I'm not saying this right or wrong,
00:20:28.160 | most people wouldn't repair and replace
00:20:30.440 | a $7,000 van with a $7,000 van.
00:20:33.120 | So let's say what would be a more normal consideration
00:20:35.440 | for somebody whose vehicle's breaking down, breaking down,
00:20:37.520 | and they wanna go out and upgrade a little bit.
00:20:39.920 | What about a $15,000 van?
00:20:42.160 | Well, a $15,000 van is gonna lose $2,250 of value
00:20:47.160 | in the first year on my ownership and depreciation,
00:20:51.640 | or basically the same amount of money
00:20:55.920 | that it's gonna cost me to repair it.
00:20:57.760 | But the depreciation is a guaranteed loss,
00:21:02.720 | and then in year two, there's gonna be another $1,912
00:21:07.280 | depreciation, and then in year three,
00:21:10.000 | there's gonna be more depreciation,
00:21:11.360 | and more depreciation, and more depreciation.
00:21:14.240 | But if I'm comparing just the cost of depreciation
00:21:17.120 | with the vehicle to the cost of the repair,
00:21:20.200 | that catastrophic repair is unlikely to happen
00:21:24.440 | in year two or year three or year four.
00:21:25.840 | It's probably a one-time cost.
00:21:27.720 | So if I fix the vehicle today, pay the $2,500,
00:21:31.320 | yes, I'm equal to going out and replacing it
00:21:33.920 | for the next year, but with owning the vehicle
00:21:36.400 | at the much lower cost, I'm limiting the downside
00:21:38.720 | of the depreciation, and I get to keep more money
00:21:42.080 | in my pocket, versus going out and buying
00:21:44.280 | the $15,000 vehicle, in which case,
00:21:47.840 | every year going forward, I'm gonna lose a couple
00:21:50.160 | thousand bucks until that value ultimately drops down lower.
00:21:53.880 | And the bigger the price jump, the worse it is.
00:21:56.520 | So if you were to jump from a few-thousand-dollar car
00:22:00.600 | to a $30,000 vehicle, well, now there's an automatic loss
00:22:04.480 | of $4,500 in depreciation in the first year.
00:22:07.840 | And this is why many people's financial situations
00:22:11.480 | are just simply destroyed, especially people
00:22:14.160 | who don't have a lot of money.
00:22:15.560 | They're driving an old car, driving an old car,
00:22:17.400 | driving an old car, here's what happens.
00:22:19.400 | They get frustrated at the continual maintenance items.
00:22:22.700 | They get frustrated, and then all of a sudden,
00:22:24.700 | some repair, a $500 repair comes along,
00:22:27.120 | and now they're just really, really upset.
00:22:29.320 | And so they go down to the dealership,
00:22:31.080 | they make a snap deal on a car that's poorly considered.
00:22:34.580 | What often ends up happening is they don't make
00:22:38.200 | a new car decision wisely.
00:22:39.740 | They'll buy a cheap car from a cheap brand
00:22:42.600 | that doesn't have a good maintenance record,
00:22:44.460 | doesn't have a good warranty, doesn't have
00:22:46.400 | a good name brand.
00:22:47.320 | They'll buy a Chevy Aveo or a Kia Optima
00:22:49.840 | or some type of cheap car that is gonna just depreciate
00:22:54.840 | like crazy, and they go out, they make a quick deal,
00:22:59.240 | massive financing costs, other decisions,
00:23:01.800 | and they lock in losing $4,500 of depreciation
00:23:06.800 | in the first year.
00:23:07.840 | They bought a $30,000 vehicle instead of paying $800
00:23:10.760 | or $1,000 to fix the car.
00:23:12.640 | Well, you make a cycle of that year by year by year,
00:23:14.760 | and then over time, your financial situation is destroyed.
00:23:18.280 | I don't like to lose money, and I recommend
00:23:20.240 | that you not lose money either.
00:23:21.800 | So calculate carefully the cost of depreciation,
00:23:27.520 | but make sure you also include some of the other costs
00:23:29.420 | of transitioning from one vehicle to another.
00:23:32.740 | Big thing, transaction costs, and those transaction costs
00:23:36.920 | really eat into the numbers.
00:23:38.540 | So again, let's go with my situation
00:23:40.320 | when I did this analysis.
00:23:42.260 | If I were gonna replace my vehicle with a similar
00:23:44.480 | comparable vehicle, which my baseline decision
00:23:46.720 | was the vehicle I own, 2007 Hyundai Entourage minivan.
00:23:51.360 | It has the appropriate space, the appropriate amenities
00:23:54.040 | that I needed.
00:23:54.880 | I'm really a fan of the minivan concept.
00:23:56.560 | It's the best vehicle.
00:23:58.000 | I use it a lot.
00:23:58.840 | I use the space.
00:23:59.660 | It's really, really great.
00:24:01.080 | And that era is new enough to be appropriate enough,
00:24:05.720 | but yet it's old enough to have a bunch lower price ranges.
00:24:09.160 | The age of the vehicle should be good
00:24:11.320 | as far as repair items.
00:24:13.200 | I like basically everything about it.
00:24:15.480 | And cheap insurance costs, really high safety ratings,
00:24:18.780 | et cetera, so I had carefully considered the decision
00:24:21.300 | before buying it in the first place.
00:24:23.200 | So that's what I wanted again.
00:24:25.240 | So if my $5,000 vehicle that I had paid for,
00:24:29.280 | I had to make a $2,500 repair,
00:24:31.560 | but to replace it with a comparable thing,
00:24:33.440 | I got to spend $7,500.
00:24:34.960 | What additional expenses?
00:24:37.880 | We talked about depreciation, but what about new sales tax?
00:24:40.360 | 6% of a $7,500 new vehicle, $450.
00:24:44.080 | In my state, Florida, it was 6% sales tax rate.
00:24:46.760 | New registration, tag, titling fees, another 200 bucks.
00:24:49.960 | So you start adding that first year depreciation
00:24:52.920 | to the new tax, to the new titling fees,
00:24:55.280 | or any other costs.
00:24:56.600 | Usually when you get a new vehicle, it needs new tires,
00:24:58.960 | it needs a new battery, it needs new wiper blades,
00:25:00.800 | it needs all the stuff that somebody ignored.
00:25:03.320 | Well, now I'm about another $1,700,
00:25:06.160 | $1,700 to $1,800 of new costs that could be avoided
00:25:09.800 | by simply repairing the existing vehicle.
00:25:12.120 | If I've got new tires on my vehicle, I did.
00:25:14.260 | Those tires have a lot of life left in them.
00:25:15.860 | If I've got windshield wipers,
00:25:17.080 | those windshield wipers have a lot of life left in them.
00:25:19.560 | Registration costs already paid.
00:25:22.800 | So when you start adding those costs,
00:25:25.320 | it adds even more friction to getting the new vehicle.
00:25:28.440 | And then even worse, I still,
00:25:29.980 | if I were to go out and buy a new vehicle,
00:25:31.600 | I still didn't solve the initial problem
00:25:33.520 | of actually selling my old vehicle.
00:25:34.920 | How do I figure out how to sell this thing
00:25:36.960 | in a non-functioning state?
00:25:38.460 | Maybe I could sell it to a mechanic for 2,000 bucks,
00:25:41.940 | which means then I'm losing all that residual value.
00:25:44.640 | So even with a really expensive repair like that,
00:25:48.920 | you can start to see the massive difference
00:25:52.380 | that even facing a big repair,
00:25:55.040 | it's better to keep it and fix it in most places.
00:25:58.440 | Another major thing.
00:25:59.440 | If you impulse buy and you've got to move fast,
00:26:04.280 | you are now in a bad bargaining position
00:26:07.800 | and you'll always lose a deal
00:26:09.640 | when you're under time pressure.
00:26:11.240 | The major way that you're able to get deals
00:26:14.400 | is by being patient.
00:26:15.860 | This is a simple example, buying cars.
00:26:19.520 | The best deals on a car is often gonna come
00:26:22.120 | from a private party, somebody that you find,
00:26:24.640 | whether it's a car sitting on the side of the road,
00:26:26.400 | somebody that's in a distressed sale,
00:26:28.420 | or they're just going through a life event
00:26:29.920 | and they wanna be done with it.
00:26:31.520 | That's usually gonna be the way
00:26:32.740 | that you get your best deal on a vehicle.
00:26:35.120 | But those things are hard to find right now.
00:26:37.400 | If you wanna go out and buy a car,
00:26:40.040 | you can usually in most towns,
00:26:41.400 | you can go drive the country roads
00:26:42.600 | and you can find some cars for sale.
00:26:44.240 | But they might not be in the price range,
00:26:45.680 | they might not be exactly what you're looking for.
00:26:47.760 | If you need to buy a car now,
00:26:49.240 | you've gotta go where they have selection,
00:26:50.900 | which is going to a dealer.
00:26:52.480 | Well, the dealer is gonna take the private party value
00:26:54.900 | that they paid for it, plus their markup,
00:26:56.960 | and that's what you're gonna pay.
00:26:57.980 | So you're paying when you go to a dealer,
00:26:59.480 | new, used, doesn't matter,
00:27:00.440 | you're paying for the convenience and the selection
00:27:02.720 | of them having their ability
00:27:04.440 | to actually have the vehicle there.
00:27:06.960 | So if you've got time and you're continually shopping,
00:27:10.620 | you can get a deal, but you can't make those deals
00:27:12.940 | materialize right when you need them.
00:27:15.320 | So impulse buying or buying fast
00:27:19.320 | means you're automatically gonna pay more money.
00:27:21.400 | So you're usually better off if you can repair it,
00:27:23.740 | and then at your leisure,
00:27:25.060 | go ahead and look around at upgrading the vehicle.
00:27:28.440 | So hopefully these examples are helpful
00:27:32.060 | when you're looking at the big repair.
00:27:34.420 | With the little ongoing repairs,
00:27:36.700 | again, take a look and actually run the numbers
00:27:38.980 | and ask yourself, which items are the maintenance items
00:27:41.620 | and which items are the repair items?
00:27:43.380 | All cars are gonna need those maintenance items,
00:27:45.040 | getting a newer car is not gonna change anything.
00:27:48.260 | Your newer car is gonna need a battery
00:27:49.600 | after two or three years, just like your older car is.
00:27:52.380 | So look through and carefully tabulate
00:27:56.080 | how much is maintenance and how much is repairs,
00:27:58.340 | and don't let the maintenance items
00:28:00.140 | unnecessarily influence your emotions.
00:28:03.700 | That's just part of the cost of operating a vehicle.
00:28:06.820 | Regardless, if you do decide that you need to change cars,
00:28:11.340 | make sure you choose very carefully
00:28:13.700 | and do your best to separate the emotion from the decision.
00:28:18.040 | So if you need to borrow a vehicle from a family member
00:28:20.740 | or from a friend who has an extra vehicle,
00:28:22.660 | or if you need to rent a car,
00:28:23.940 | or if you need to use Uber for a few days,
00:28:25.860 | do that so you can go slower and make a good decision.
00:28:28.780 | Don't compound one bad event in your life
00:28:31.740 | with more bad decisions,
00:28:34.020 | otherwise you wind up screwed over time.
00:28:36.720 | So don't compound those bad decisions.
00:28:39.540 | At some point, break the cycle,
00:28:40.900 | and if your car is breaking down on you
00:28:42.340 | and you need to do a new one, go carefully.
00:28:44.920 | Buy a reliable car, choose carefully, buy yourself time,
00:28:48.220 | let some friends help you out.
00:28:50.100 | Now, big thing that happens to people,
00:28:52.260 | what if the car isn't paid off
00:28:53.740 | and you're trying to figure out
00:28:58.020 | how do I move on to the next vehicle
00:28:59.940 | when the car isn't paid off,
00:29:00.900 | and I've got all these repairs?
00:29:02.180 | This is one of the major traps that keeps people poor.
00:29:05.340 | And be aware of it.
00:29:08.320 | It's, in most cases, not gonna be a problem
00:29:11.620 | from this perspective,
00:29:13.060 | that since it's usually gonna be better
00:29:14.640 | for you to repair the car rather than replace it,
00:29:17.020 | just repair the car and keep on going.
00:29:19.360 | But if you repair it and keep paying the loan down
00:29:22.680 | until you get out of this trap
00:29:23.720 | of owing more on the car than it's worth.
00:29:25.880 | So don't cut that bad decision.
00:29:29.280 | If you owe money on the car,
00:29:31.320 | that's a bad decision to owe money on a depreciating asset.
00:29:34.580 | So cut it off as quickly as you can, repair the car,
00:29:37.240 | and then work on selling it.
00:29:38.480 | That's always gonna be better.
00:29:40.000 | The basic thing that you gotta remember with cars
00:29:42.600 | is that they're a total money suck.
00:29:45.160 | And if you wanna be wealthy,
00:29:46.460 | you've gotta, gotta, gotta, gotta, gotta
00:29:48.220 | minimize the amount of money that you lose
00:29:50.300 | on things that go down in value.
00:29:52.180 | So buy the least expensive transportation
00:29:55.260 | that meets your needs.
00:29:56.500 | Clarify the needs,
00:29:59.660 | and buy the least expensive transportation
00:30:01.220 | that meets your needs.
00:30:02.500 | There are some times,
00:30:03.380 | it doesn't necessarily always mean the cheapest of the cheap.
00:30:06.260 | Cheap is not always cheap.
00:30:07.680 | Sometimes spending a little bit more
00:30:09.620 | is gonna buy you better.
00:30:10.860 | And sometimes you should buy something more.
00:30:13.320 | If your car makes you money, choose carefully.
00:30:15.520 | For example, there's a major cost to downtime.
00:30:17.780 | If you're actually making money with your vehicles,
00:30:20.600 | downtime costs you.
00:30:22.200 | If you are running a fleet of over-the-road delivery trucks,
00:30:25.120 | those trucks better be in good shape.
00:30:27.440 | Every hour that one is sitting by the side of the road
00:30:29.200 | broken down costs you money.
00:30:30.920 | And that's a measurable number,
00:30:32.360 | which is why you'll often see a large company
00:30:34.800 | that's running a fleet, their vehicles are newer,
00:30:36.460 | because there's a cost to downtime.
00:30:39.760 | If you're making money on a vehicle and actually earning,
00:30:42.500 | then in that situation,
00:30:43.620 | downtime becomes your biggest expense, not depreciation.
00:30:46.420 | But what about you as an individual person?
00:30:49.700 | Does your car make you money?
00:30:50.860 | Maybe.
00:30:51.820 | Maybe your car gets you to work,
00:30:53.940 | and this actually really hurts poor people sometimes,
00:30:55.980 | that they have cars that are breaking down often,
00:30:58.540 | makes them unreliable,
00:30:59.580 | it can cause them problems where they're unreliable at work
00:31:04.580 | 'cause they can't get there.
00:31:06.180 | Which by the way, helps somebody
00:31:07.540 | if they're in that situation.
00:31:08.780 | Help them get out.
00:31:09.620 | Give them a few thousand bucks or give them a car.
00:31:11.700 | Give them your $4,000 car
00:31:13.220 | as you're trading up to something nicer
00:31:14.420 | so they can have some reliable transportation.
00:31:17.340 | 'Cause that's one way that you can help someone
00:31:18.860 | to break that cycle of poverty.
00:31:20.980 | But as an individual person, we've got more options.
00:31:24.740 | Don't freak out about the car being broken down.
00:31:26.780 | In a world of Uber, you're better off than you've ever been.
00:31:29.960 | Uber is fundamentally transforming things.
00:31:31.780 | And I am personally much less worried
00:31:34.820 | about having unreliable transportation
00:31:36.500 | than I ever was in the past.
00:31:37.940 | Here where I live in Palm Beach County,
00:31:39.980 | taxis are horrendously expensive.
00:31:42.180 | And this is a huge county where everything is far away.
00:31:45.340 | But at this point in time,
00:31:46.500 | if my car were out of commission for a couple of weeks,
00:31:49.500 | it would be not that big a deal to me
00:31:52.540 | because number one, I've got a strong family network
00:31:54.800 | that can help me out easily and lend me a car.
00:31:57.460 | I've got a strong friend network.
00:31:58.740 | People can help me out, lend me a car.
00:32:00.820 | And I've got Uber.
00:32:02.100 | And I can get around a few times a week
00:32:03.540 | and pay 50, 100, 200 bucks for Uber.
00:32:06.580 | And that's a lot cheaper than losing thousands of dollars
00:32:09.260 | on a much newer and nicer car.
00:32:10.860 | So what are the things that you can do today
00:32:16.020 | to prepare for the eventuality
00:32:17.420 | of your car breaking down on you?
00:32:19.580 | Plan and save.
00:32:20.700 | If your car is nickel and diming you with ongoing repairs,
00:32:26.540 | it might be time to upgrade.
00:32:29.300 | So the time to make that decision is now,
00:32:34.140 | not when you're frustrated at the car breaking down.
00:32:37.700 | Plan for the upgrade.
00:32:39.380 | Start shopping for a deal now
00:32:41.440 | when you've got time on your side
00:32:42.780 | and there's nothing broken on the car.
00:32:44.740 | That'll help you because you can find the deal,
00:32:47.540 | take your time finding what you're gonna buy,
00:32:49.660 | and then you can take your time
00:32:51.020 | finding the buyer for your car.
00:32:52.860 | And you can sell it as a working car
00:32:54.660 | at a much higher price point than as a broken down car.
00:32:58.340 | So if your car is nickel and diming you
00:33:00.260 | and you've done the analysis
00:33:01.480 | of which of these costs are repair items
00:33:03.620 | and which of these costs are maintenance items,
00:33:05.060 | recognizing that all cars are gonna have maintenance,
00:33:07.860 | then go ahead and plan.
00:33:09.380 | Find a good deal.
00:33:12.140 | Take advantage of the seasonal deals,
00:33:13.900 | rebates, special incentive programs
00:33:15.480 | if you're buying a newer car.
00:33:17.340 | Take advantage of a friends and family deal
00:33:20.020 | when one comes along
00:33:21.020 | or when you see a great deal on the side of the road.
00:33:23.500 | And then plan and save now
00:33:26.220 | in case you face a catastrophic repair.
00:33:29.020 | And it is possible that you could wind up in the situation
00:33:32.020 | where your car is simply not worth repairing.
00:33:34.960 | In that case, have a plan now
00:33:36.940 | for what type of car you'd like to buy and why.
00:33:40.020 | I would encourage you, think ahead at all times
00:33:42.240 | about what's the next vehicle that you're gonna buy.
00:33:44.920 | I know exactly what,
00:33:46.100 | if my car were totaled in an accident today,
00:33:49.180 | I know exactly what the next car that I would buy is.
00:33:52.060 | So have that plan, know the market values
00:33:55.260 | so you can keep your ears open.
00:33:56.860 | And by just simply planning ahead
00:33:58.860 | if a catastrophic loss happens
00:34:00.540 | and if you run the analysis
00:34:01.540 | and you need to buy another one,
00:34:02.900 | then you'll make a wiser decision
00:34:04.660 | than if you just jump
00:34:06.580 | because you're emotionally frustrated.
00:34:08.480 | Pay attention to brands, pay attention to reliability.
00:34:12.540 | A lot of the problems that people face,
00:34:14.020 | and this is one of the major cycles of poverty that happens
00:34:17.480 | is when people make fast decisions
00:34:19.780 | and they don't think carefully about them,
00:34:22.100 | those decisions tend to compound.
00:34:24.140 | They buy a flashy, convertible Mustang
00:34:28.220 | because it looks cool.
00:34:29.980 | But they wind up finding out
00:34:31.780 | that it's actually a really unreliable car
00:34:34.060 | and there's all these expenses that are associated with it
00:34:36.580 | and it's really not safe
00:34:37.700 | and it's breaking down all the time.
00:34:39.200 | So then they jump from one thing to the next
00:34:41.980 | and they jump to a new car
00:34:43.540 | that has all these other things associated with it.
00:34:45.420 | And these snap decisions, snap decisions, snap decisions,
00:34:48.620 | many people repeat them again and again and again and again.
00:34:51.420 | And then they wind up years later saying,
00:34:53.660 | but I had to make this decision.
00:34:55.620 | No, you didn't.
00:34:57.340 | Stop making bad decisions quickly,
00:35:00.620 | slow down, go carefully, and plan ahead
00:35:05.380 | and you'll make wiser decisions
00:35:06.660 | and hang on to more of your money.
00:35:08.360 | Wanna touch on two last things and we're done for today.
00:35:12.140 | Number one, the discussion of the half the value rule.
00:35:16.100 | That's the only kind of rule of thumb
00:35:19.100 | that I've heard people say.
00:35:19.940 | If your car repairs are gonna cost you
00:35:21.440 | more than half the value of the car,
00:35:23.340 | then it's probably better to replace the car.
00:35:24.820 | Take the money, sell it, take the money
00:35:26.500 | and put it with your cash and buy the newer car.
00:35:29.420 | I really can't even,
00:35:30.980 | although I understand the sentiment behind it,
00:35:33.100 | I can't justify this one.
00:35:34.620 | I can't make it work for me personally
00:35:37.380 | because even if my $4,000 car,
00:35:40.980 | I've been in a situation, a $5,000 car
00:35:43.620 | and I gotta fix it and it's $2,500,
00:35:46.180 | I'm still probably better off fixing it,
00:35:49.100 | driving the car that's a known quantity
00:35:52.060 | and then selling it in the market value
00:35:55.300 | as a repaired car versus a broken down car.
00:35:58.460 | I don't know where to get a good price
00:36:00.540 | for a broken down car.
00:36:01.780 | And I don't know where anyone else would either,
00:36:03.380 | unless you were a mechanic and you could fix it up
00:36:05.940 | or you had some kind of inside line on it.
00:36:07.940 | So even that rule of thumb that you'll hear about,
00:36:10.380 | if the repair is more than half 50% of the value of the car,
00:36:14.100 | personally, I can't make it work.
00:36:15.620 | I can't make it make logical sense.
00:36:17.620 | If any of you guys think I'm wrong,
00:36:18.740 | I'm happy to be shown why I'm wrong,
00:36:20.500 | but I look at it and I just simply say,
00:36:23.020 | a working car is better to be sold than a non-working car.
00:36:26.740 | Second thing, cars last longer than ever.
00:36:30.980 | So choose carefully, make wise decisions,
00:36:33.460 | pay a lot of attention to reliability
00:36:35.460 | and when you're paying attention to reliability,
00:36:37.260 | hopefully you'll wind up better in the long run.
00:36:39.860 | So don't be scared of a car and run out and trade it in
00:36:44.060 | just 'cause it's got 100,000 miles or 200,000 miles.
00:36:47.700 | Run the actual numbers on your actual situation
00:36:51.020 | and make your decisions based on data,
00:36:53.220 | not based on an emotional feeling.
00:36:55.180 | And I believe that if you'll do these things,
00:36:57.060 | you will wind up significantly more wealthy over time.
00:37:01.460 | That's it for today's show.
00:37:02.300 | That's what I wanted to share with you.
00:37:04.060 | Hope this is useful to you.
00:37:05.500 | If any of you have better ideas than me on this one,
00:37:08.820 | I would be happy to hear from you.
00:37:11.540 | If you found have better articles,
00:37:13.540 | I have searched to see if anybody else
00:37:15.340 | has any good insight on this.
00:37:17.720 | I've not seen it.
00:37:18.840 | I've not found any justification
00:37:20.340 | for these rules of thumb.
00:37:21.540 | But what I've learned is that you guys,
00:37:22.820 | the Radical Personal Finance listening audience
00:37:24.540 | are actually a lot smarter than I am.
00:37:26.380 | So if you've got any really great resources on this,
00:37:28.580 | if you think that my perspective on it is wrong,
00:37:32.620 | come tell me why.
00:37:33.860 | Come by the show notes for today's show
00:37:35.460 | and let me know why I'm wrong.
00:37:37.140 | I'd be happy to hear from you
00:37:38.080 | because I have struggled and struggled
00:37:39.940 | to come up with a good answer for this one.
00:37:41.380 | But at this point, you've heard my answer.
00:37:43.720 | Almost always better to repair
00:37:46.260 | and then transition over time.
00:37:47.500 | It's totally cool to buy a newer car,
00:37:49.100 | totally cool to buy a fancier car.
00:37:50.780 | Just do it intentionally and don't do it on an impulse.
00:37:54.660 | Life's not about being the richest at the end of the day.
00:37:58.140 | There's a minimum acceptable standard.
00:38:00.100 | If you're a millionaire,
00:38:01.020 | unless you wanna drive around in a $500 car, don't do it.
00:38:04.540 | You know, drive a nice car.
00:38:05.880 | But just don't make, I just hate seeing this decision.
00:38:10.540 | I've seen over the years more mistakes made in this area
00:38:13.940 | than anything else that I can think of,
00:38:15.940 | of people, cars breaking down, dig mechanic bill.
00:38:19.700 | What do I do?
00:38:20.580 | And it's tough.
00:38:22.380 | It's tough to know what to do.
00:38:26.680 | So that's it for today's show.
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