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My name is Joshua Sheets. Today we continue our How to Buy a Car series. This is episode 3 in that series. Episode 1, we talked about deciding whether you should buy a car or not, and I encouraged you that if possible, most people should avoid owning a car from a financial perspective, but many of us from a lifestyle perspective will choose to buy a car.

But you should decide and think carefully about the things you would give up by even buying a car in the first place, while also considering the reasons why a car could be a really important part of your life assets. In episode 2, we talked about deciding what kind of car you should buy.

We talked about analyzing your needs, your wants, the size of the car, the specific capabilities, the features, the fanciness, the image, etc. and even your needs now and later. I walked you through so hopefully you have some ideas of deciding what kind of car would be appropriate for you.

In today's episode, I want to talk to you about step 3, which is decide how much you should spend on a car. We want to do this before we go to the market to look at what is available. We want to decide how much you should spend on a car.

I want you to come up with a specific number that will be appropriate for you to spend on a car. Quick reminder, why does this matter? Very simply, a car is a big purchase that will go down in value. Again, slight caveat, over the last couple of years it has been a wacky market, cars have not gone down in value the way they traditionally have, but I think it is very obvious that this is a temporary aberration and we will quickly return if we haven't already returned to a normal market with cars, where cars go down in value.

This matters a lot when you think about growing your finances. Cars are not usually the biggest expense that people make. For example, a house is usually the biggest expense that most normal people make, but purchasing a house is a good way to increase your net worth. Houses generally go up in value.

Cars generally go down in value. There are other large expenses that we know are pure consumption items. For example, if you plan an elaborate and expensive vacation this year, you will go into that knowing that I am spending money on something that I want to spend money on and there is no sense of financial return to it.

People look at cars as having utility value, I have to have one, it is something that I need. If you are going to be losing money on something that has utility value, you want to make sure that the amount of money that you lose is not going to sink you.

We make lots of purchases of things that go down in value. You might go out and buy the latest $1,000 iPhone and that iPhone will lose half or more than half of its value in the first year of ownership. But that amount of financial loss isn't going to sink most people.

It might sink someone who is very young or who has very low wages, but that decrease in value of a $1,000 iPhone losing $500 of depreciation is not going to sink most people's finances. But if we compare the $1,000 iPhone to a $50,000 car, we are in a very different situation.

A $50,000 car that loses 15% of its value in a year, which is the normal rate of depreciation of vehicles, will lose $7,500 of value this year. That's too much money to lose until you're rich. Remember, I often compare this to something like fully funding a retirement account. If you fully fund a Roth IRA, that simple annual contribution, instead of losing $7,500 on vehicle depreciation, you choose to put the money into a retirement account.

That decision alone, doing that every year, can make you a millionaire in the fullness of time. So that's too much money to lose until you're rich, especially when we're talking about depreciation alone. Remember that depreciation is not the only expense. The rest of your car expenses will generally be proportionate to the purchase price of your car.

Buy a more expensive car that's newer, you'll generally have a higher cost of insurance. Buy a more expensive car that's newer, you're more likely to spend extra money modifying it and getting it accessorized just the way that you want. Even buy a new car and you're going to spend more money on car washes and car washing equipment, etc.

Now, these aren't always perfectly proportional. There are often ways that you can look at this and argue the opposite. For example, an older car might actually not save you that much on insurance if it is an unsafe car. Because remember that there are two components to purchasing auto insurance.

There is your liability component and then also your comprehensive and collision insurance, which is based upon the value of the car. But if you're just maintaining liability insurance on your vehicle and you are seeking to carry -- you're maintaining liability insurance on the vehicle, then your risk -- my brain totally froze up -- your risk is going to be based upon the risk of injury to inhabitants of that vehicle in many cases.

So sometimes an older car doesn't actually save you that much money on the liability component. But generally, you're going to have cheaper insurance with an older car. You can often drop your comprehensive and collision coverage on an older car where you wouldn't do that with a newer car, etc.

So prices and costs and expenses on a car are generally proportionate to the purchase price. A car is a big purchase that will go down in value. And so we want to minimize the losses to an amount that is acceptable based upon our current net worth and our ambitions for wealth building.

So how much should you spend on a car? I'm going to give you three suggestions. The first suggestion is you should spend the amount of money that you have. And what I mean is you should limit your purchase to the amount of money that you have saved. I'll talk in a separate episode about the advisability of financing cars versus paying cash.

There are a few scenarios in which it can make sense to finance a car, which I'll deal with separately. But in virtually all other scenarios, you're better off simply paying cash. And you should limit yourself to the amount of money that you have saved. Here I'm specifically targeting people who are younger in their wealth building journey.

If you've got $5,000 saved in a bank account and you want to go and buy a car, don't go out and start shopping for $20,000 cars. Shop for $4,000 and under cars. Always limit yourself to the amount of money that you have saved. Car payments are a seductive thing.

Car payments are the sign and stigma of poor people. You can raise your income to the point where, "Yeah, I've got a car payment. It's no big deal." There are lots and lots and lots of multi-millionaires out there who have a couple thousand dollars a month in car payments, and it's no big deal.

They take advantage of a 0% financing. They like driving new cars, and it's no big deal. But most people who have large car payments are broke. They're not broke because they borrowed money. They're broke because they borrowed too much money. They're broke because they didn't obey the rules that I'm going to get to in a moment.

One simple way of avoiding disaster is simply limiting yourself to the amount of money that you have. This simple rule is astoundingly effective because it causes you to think very carefully about the value of a car. Let me give you an example. Let's say that you're 25 years old.

You've been a diligent saver. You've saved $50,000. Would you really go out and freely spend $50,000 on a car in that scenario? Most people who were diligent enough to save and accumulate $50,000 would not do that. They would recognize that they saved the money for a reason, and they would focus on finding an investment for the money that could allow it to grow more.

But there are many people who will go out, and because there's lower friction of having car payments, easily buy a $50,000 car with a series of timed payments. You want to avoid that. Rule number one is limit yourself to the amount of money that you have, the amount of money that you have saved.

It's a good rule of thumb. The next limitation is don't ever spend more than somewhere between 10% to 50% of your annual income on cars or cumulatively vehicles. You'll notice that's a very broad range. 10% to 50% is a big range. Your decision on how much to spend on a vehicle will come down to some of the other factors that we've talked about.

If you never go more than 50%, you're going to be fine. But if you really care about wealth building, I would encourage you to focus on about a 10% of your annual income. Again, the reason this is important is it keeps your money available to you to invest in the things that are going up in value.

Let me talk about these ranges of numbers. The 10% rule I owe to many years ago, a blog post by the financial blogger Financial Samurai. This was 10 years ago. I came across his original blog post on the subject and I thought, "That makes sense." Prior to that, I had no personal rule for the amount of car to buy.

Most people don't. If you go and you ask a random person on the street, "How much should you spend on a car?" Most people don't have any rule. They will say, "As much as you can afford," but how would you know what you can afford? Or they'll say, "As much as you have," or you need some rule.

When I found the 10% rule, it resonated with me because 10% is such a low amount of money that it always keeps huge amounts of your money available for investing. Let's go through some numbers. If you're earning $30,000 a year, that means that you should buy a car that's worth about $3,000.

To me, that feels right. Somebody making $30,000 a year desperately needs to save money. They can't afford to take a bunch of depreciation. $3,000 car will go down by 15%, which means that it will lose about $450 a year. That's reasonable. That person will have a $1,000 iPhone and a $30,000 car will lose $1,000 between the two of them.

Good to go. But if a person making $30,000 goes out and buys a $30,000 car, again, that $30,000 car will lose 15% of its value this year. That'll be $4,500. That is a huge percentage of income to be losing. If someone's making $100,000 a year, they can go and buy a $10,000 car.

When we get to those numbers, it starts to feel a little bit stranger because most people's lives are not optimized towards wealth accumulation. Say, $100,000, you should buy more than a $10,000 car. If you care about being wealthy, you'll stick to the 10% rule or something near it. A $10,000 car will lose 15% of its value, which means you'll lose $1,500 this year on depreciation.

That's a reasonable amount of money to lose in depreciation if you're earning $100,000. But if the person earning $100,000 goes out and buys a $50,000 car, again, that's $7,500 of depreciation lost this year on a $50,000 car. That feels excessive to me. To lose 7.5% of your income to depreciation on an automobile, that's too much.

You're not going to get wealthy losing that much on silly expenses if you can avoid it. Someone making $300,000 a year, well now $300,000 a year, 10%, means that you can go out and you can purchase a $30,000 car. Here's where the numbers start to get a little bit more unglued.

I think that you can follow that 10% rule all the way up. Want to have a $100,000 car? Make sure you're earning a million dollars a year. That feels right in many circumstances. But the problem is that you start to get into a lifestyle disparity. Someone's making half a million dollars a year buying a $50,000 car.

Because the numbers are so much larger, I think there you could tilt it up and still be fine. Someone earning $500,000 a year could go and purchase a $200,000 car. That would be a lot, but you could do it. A $200,000 car would have a depreciation this year of $30,000.

If the person earning $500,000 a year is also saving $150,000 to $200,000, that person is going to be wealthy no matter what happens. You can follow the 10% rule all the way up. Can you change on the 10% rule? Can you adjust it? Well, I think you can. If becoming rich fast is not your number one goal, there'll be times in life where you look around and you say, "I can't quite accomplish what I need on this budget." I imagine a father with a few children, three children, wants to go buy a minivan, looking around and saying, "I'm making $50,000 or $60,000 a year, but the minivans in the $5,000 space, that's not quite what I want.

I'd like to have something that's a little bit newer that I can own for longer. I want to have something that's more comfortable, long road trips, et cetera, all the reasons we always give for buying new cars." Can you go a little higher? Well, I think you can. My number is the absolute maximum ceiling should be 50% of your annual income, 50%.

That 50% number needs to not just be for one car, but the 50% number needs to go for all of the vehicles or all of the stuff in your life that is depreciating assets, depreciating rolling stock, cars, motorcycles, boats, campers. Anything like that that goes down in value needs to be limited to 50% of your annual income.

Here, I want to credit Dave Ramsey as the loudest proponent of this rule, and I think he's right. If you think about the financial space, let's say that you have a household income of $50,000. If you have a household income of $50,000 and you have up to $25,000 in vehicles, $25,000 going down at 15% per year this year, that would be $3,750.

That's quite a lot of money for someone making $50,000 to lose, but it's probably not going to sink that person. There's still going to be enough other money available. As you go up, the numbers make even more sense. $150,000 household, okay, $75,000, that's not unreasonable. Let's say you have two cars, two $30,000 cars and a $15,000 camper, things like that, $15,000 boat, two $30,000 cars.

You can put it together however you want. That's not unreasonable. It's still a significant amount of money in depreciation. $75,000 of vehicles would be a loss of $11,250 this year in depreciation, but at least you're okay. It's not too high. My answer to you, if you can't find something that you need at 10% is, you can go anywhere from 10% to as high as 50% if you need to.

If you're serious about wealth building, focus on 10%. If you're not so serious about wealth building, you just want to be generally prudent, you can go as high as 50%. But if you have more than 50% of your annual income in the total value of cars, vehicles, etc., then you should limit those expenses and consider changing something.

In a moment, I want to talk about what do you do if you wake up and you have too much, but let's go on to the third rule. Here again, I want to credit Financial Samurai. What's the net worth rule? What if you are someone who has $5 million in the bank, but you just have some dividend stocks that are paying you some money and you don't spend a lot of money, you live debt free, you own all your assets, you're doing fine, you spend say $100,000.

You have $5 million of assets, but you have $100,000 of income that you're living on. Does that mean that you should only drive a car worth $10,000? Well, here I think we can move to a net worth rule. Financial Samurai's math, which again I'll link both of his excellent blog articles on this topic, Financial Samurai's math is 5% of your net worth.

So if you think about a net worth rule, you can always go and spend 5% of your net worth on a vehicle. If you have $100,000 net worth, you can buy a $5,000 car. Most people with $100,000 net worth are not calculating their wealth based upon their net worth, they're calculating their net worth based upon their income.

But if you have a $5 million net worth, you could go and you could spend 5% of your net worth on vehicles, $250,000 total. Now if you think about it, that ratio feels really good to me. And again, this is not just for a car, this is for all of your, what I call rolling stock, right?

All of your cars, all your trucks, all your tractors, all of your boats, your motorcycles, etc. Even airplanes, whatever it is that you have. $5 million, $250,000 of stuff going down in value, that seems to me really reasonable. You can fit in plenty of toys on that. You would have a depreciation of $37,500 on a $5 million net worth.

That's not going to sink you, right? If your income, if your assets increase by 5%, they're going to increase by $250,000. So you're still going to be building wealth over time. $37,500 of depreciation is not going to sink you. And that still allows you with enough money for you to be able to go and purchase the kinds of toys that you might like to have.

Could you go higher? You can. And so if you choose to, you can. There is going to come a time in which having more assets is not so significant for you as much as consuming those assets and using them for their purpose, the reason you saved them in the first place.

So if you make the conscious decision at some point to stop growing your net worth, then you can spend up to the amount of your net worth that you have in income. You can spend up to your income in depreciating assets, and you could choose at some point to go ahead and start consuming assets.

But if you want to continue growing your net worth and you're looking for a good round target to target, the number is 5% of your net worth. So those are the three rules. Number one, limit yourself to the amount of money that you have saved. Don't go into debt for stuff.

Don't go into debt for cars. Don't go into debt for boats. Don't go into debt for that stuff. I'm not 100% on that, but I'm 98%. I'll lay out in a separate show the exceptions to that. But my entire lifetime, I have watched people, when times are good, they say, "I'm going to go into debt." Times are not always good.

And so there's a benefit to being conservative and avoiding payments. Years ago, I knew a guy, very wealthy guy, and his comment to me was, "I always avoid payments because then no matter what happens, I'm fine. I can go get a job as a bagger at a grocery store and I can be fine because I don't have payments.

My life isn't going to collapse." And to me, that's always been something very attractive. There are a few situations in which I think it makes sense to take payments on, but they're very, very limited. And the vast majority of the time, you should limit yourself to the amount of money that you have saved.

It will allow you to make good decisions. Second rule is spend no more than 50% of your annual income and target, if you're serious about building well, spending no more than 10% of your annual income on a vehicle. And if you're wealthy and you're living based on assets and you don't have an income that you're going to calculate on, you can spend up to 5% of your net worth on things that are going down in value like cars.

Are there counter arguments as to why you should spend more? Of course there are. People who want to spend their money will always find ways to justify spending their money. But I think the counter arguments as to why you should spend more, given the guidelines that I've given, can always be negated.

The primary argument that people will give is, "I don't want an old car that's going to break down all the time." That kind of comment reflects basically a 1980s mentality. There was a period in car history in which if you had an older car, you could expect it to be breaking down all the time.

But after the revolution of Japanese automobiles in the 1980s, followed up by Japanese and Korean and just amazing improvements in quality across the board on practically all manufacturers, we're at a point now where any car can be reliable. Reliability is much more a function of your carefully choosing a make and model that is known for reliability and carefully choosing a vehicle that has a known history, more than it is a function of the age of the car.

On virtually any budget, you can find a very reliable automobile on virtually any budget following those rules. Making $50,000 a year, you can find all day long reliable $5,000 vehicles. The one that is more persuasive to me has to do with safety. Can I get a safe car based upon those numbers?

I've taken a lot of pride over the years of finding cheap cars. I've told this story, but I'll say it again. One of the best deals I found one of the years ago was I was going along and I found a friend of mine who was selling an old Toyota Corolla and she sold it to me.

She didn't want to drive anymore. She sold it to me for $500. It was a fair price and the car was basically the perfect cheap car. It was a little four cylinder car, manual transmission, manual windows, manual door locks, nothing to go down, nothing to break down. It was a 1998 Toyota Corolla.

The engine will run until about a half a million miles. It's a completely bulletproof car. I bought it for $500. I fixed up a couple of things, cosmetic, I don't even remember at this point in time, but I had virtually no money in the car and I just kept it as a little beater that I could lend out to people or if my car went broke, broke, went broke.

If my car broke down, I could use it, et cetera. I was driving it one time and I thought to myself, Joshua, why are you driving this? This is not worth it because for all of the frugality benefits of that car, it is not a safe car. I was driving along at 70 miles an hour on I-95 and I thought to myself, I do not want to get in an accident in this car.

Yes, it has an airbag, but I do not want to get in an accident in this car. I decided to get rid of it. I sold it to a friend of mine and that friend is still driving. It's still doing fine. Never breaks down because there's nothing that can break on it.

It's a perfectly reliable, perfectly useful car that was unsafe. But that doesn't mean I need to go and spend $30,000 on a vehicle. To get a safe car, I don't need to spend $30,000. If you will shop based upon safety on almost any budget, again, $5,000 to $10,000, you can find cars that are very well regarded for safety.

Years ago, I bought a $5,000 minivan, five-star crash rating minivan, all of the airbags, all of the stuff around the side curtain, the front, everything, et cetera. I went and watched the crash tests. Perfectly safe, perfectly reliable, $5,000. If you're at least in that range of $5,000 to $10,000, you can find cars that are safe.

What about image? Image is one where you will often have a hard time. If by image you mean a new car or a certain brand of a car, you will often have a hard time getting a car that fits those rules, especially if you're trying to tend towards the luxury brand schedule.

A BMW, a Mercedes, with a few exceptions on the models, they're just not going to be as reliable. You buy an older one, it's not going to be as reliable. It may still be very pleasurable, but it's not as reliable as a '98 Toyota Corolla in terms of breaking down.

What you can do is if your budget limits you to an amount that is below what many people are doing, you can often find one of those hard to categorize vehicles that I mentioned in the previous episode. You might find a great 1970s Jeep Grand Wagoneer that has all this classic style.

It's not super reliable, but it's not expensive. You might find vehicles that shift through. For example, Land Rovers have horrible value. They depreciate like crazy. That's because they're pretty unreliable. If you need a Land Rover, you can often buy something like that that's cheaper. It's not going to be reliable, but your image needs where those vehicles are perceived to be prestige brands.

Minivans, SUVs, et cetera, those kinds of vehicles that break through the mold, you can often find something that fits those budgets. Don't automatically take an excuse and say, "I'm limited to a certain amount. I can't get the car that I want." Exercise your creative juice and find a vehicle that fits your needs.

Last question, what do you do if you have too much car? What if you wake up today and you have 80% of your annual income in cars? It's probably something that you should change. The numbers here will vary. If you say, "Joshua, I've got 59% of my annual income is in vehicles, but I was strategic and careful about the vehicles that I chose." I find this most of the time with young families.

They say, "We wanted a minivan. We went out and bought a brand new minivan. We're planning to have it for a long time. Yeah, we paid $55,000. We got a household income of $85,000." I would say it's too much money. If I were advising you before the sale, I would advise you not to do it.

But that doesn't necessarily mean you should just dump the car today. You should probably, in that situation, just keep it. If you own too much of a car, your first way out is just keep the vehicles until they depreciate down to a lower amount and then be more thoughtful the next time around.

The best way for you—I need to be careful with my words—a very good, reliable way to eliminate the problems of buying too much vehicle is to keep your vehicle for a very long time. Remember, depreciation is an annual number based upon the current value. So that $50,000 car that declines in value this year by $7,500, this next year it's worth $42,500.

And then it'll receive a 15% depreciation, which means it'll lose $6,375. And in the second year, it'll be down to $35,000. So your car today that is too much for your income will very quickly be worth less. If you keep it, you can enjoy the benefits, the reasons that you bought the car in the first place, and enjoy them for a long time by just committing to keep the car.

Because cars depreciate in value so much, very quickly your car will be down into the ratio where it makes sense. And now that you know the ratio, you can avoid going out and simply making another big mistake. I think financially a very good argument can be made that the person that goes out and buys a brand new vehicle today, spends $60,000 for a wonderful loaded minivan, and keeps it for 20 years, will probably be ahead of the person that's constantly trading out a vehicle every three or four years and trying to keep frugal purchases by following the numbers and buying $15,000 vehicles.

I think there's a good argument to be made for that. If you bought it new, you know the history of the car. If you bought a car that was a good vehicle, that was known for reliability and for good ownership costs, you can own it from new, you can make sure that all the maintenance is taken care of, you can get your real money's worth out of accessories, modifications, things like that.

The car can serve you, be a wonderful part of your lifestyle, and it can just be, it pays off when you keep it for a long time. So in most cases, I think the best thing is just keep your vehicles that you have and own them until they're insignificant in terms of your overall financial situation.

Where that advice is not appropriate is if the numbers are radically out of whack, or if you've got a radically inappropriate vehicle. You're making $50,000 a year and you've got a $100,000 car that you got on payments and you're just barely making it and you've got a huge amount of money left that you owe on it.

Well in those kinds of situations, you're so radically out of balance that you have to get rid of it. You will never get ahead financially making $50,000 a year with a $100,000 car. You have to change it. And in today's world, it's remarkably not unheard of to have some of those numbers.

You can have a loaded out pickup truck or a loaded out SUV that approaches $100,000 and if you finance the car and you had a big down payment and you stretched the payment out over 72 months, etc., that may have been considered affordable and they lent you the money for it.

But you'll never get ahead financially owning that much vehicle. So if the numbers are radically out of whack, then you should sell the car. If you have payments on a vehicle, then you should very seriously consider selling the car. I will devote an entire episode to the scenario of, "Hey Joshua, I've got a big car payment and I owe more on it than it's worth and I have no money.

What do I do?" This is a very difficult situation that many people wind up in because people who are in the habit of buying new cars frequently roll negative equity from vehicle to vehicle to vehicle to vehicle and they wind up upside down having a car that's worth $40,000 and they have a car note of $52,000 and there's nothing they can do because if they sold the vehicle, not only would it sell for $40,000, they would have to come up with $12,000 out of pocket to pay off the note in order to get the title so they can accomplish the sale.

And worse than that, they would still have to come up with the money out of pocket to go and pay for another car. So this is a very difficult situation. But in some cases, if you can effectuate the sale, just simply amputating cars can free up enough money that you can clean up other messes, etc.

In closing, you decide how much money you're going to spend on a car and decide it before you go shopping. You may find after shopping that you need to adjust your budget in some regard. But don't start by going out to the car market and kind of wandering around because as soon as you do that, you will be quickly and easily enticed by low monthly payments, easy financing, you'll be quickly enticed by the wonderful new car smell, how shiny it is, how beautiful it is, how comfortable it is.

Then you'll start justifying to yourself a whole long list of very practical justifications. "I'm going to buy this car because it's safer for my children and after all, my children are my number one most valuable possession and aren't they worth it to protect? I'm going to buy this car because it has a really great MPGs and after all, gas prices are really high right now.

I'm going to buy this car because it's going to impress the world and it's going to give them the image that I need to portray to them. I'm going to buy this car and I'm going to keep it for a really long time. That way, my mistake of buying too much car and spending too much on it isn't going to actually pay off." You'll justify it.

We all do. All of us justify it to ourselves. So come up with your rule for the reasons that make sense to you and stick to your rule and understand what your numbers are before you go to the car marketplace. These are my suggestions. Number one, don't spend more money than you have saved that you can just simply write a check for and buy the car.

Number two, limit your total vehicle ownership to 10% of your annual income, annual household income. If you can't do it on 10% and you're willing to have a slower path to wealth, you can go above 10% to a maximum of 50%, never more than 50%. But if it's 15%, okay, and you're willing to give it up, that's fine.

Or if you're wealthy, then limit your vehicle exposure to 5% of your net worth. If you follow those rules, you'll have the vehicle that you need and that you want, and you'll continue to build wealth, which makes the vehicle far more enjoyable. I have made a lot of financial mistakes in my life.

One of the few mistakes that I have avoided is having a car payment. I've never had a car payment. And having lived my entire adult life free of car payments, you can't get me to go and change that. I'm telling you, it is the best feeling in the world to know that you have control of your money.

If you avoid car payments, virtually anything else that you want is within your reach. I'm not opposed to borrowing money for assets that are going up in value. Houses, businesses, investments, those are all good uses of borrowed money. But cars are not a good use of borrowed money. Boats are not a good use of borrowed money.

RVs are not a good use of borrowed money. Because when you wind up out there in the thing, you're always thinking about how much it costs you, and you can't ever enjoy it. So if I want something that is more than I have, I use that as motivation. If you're earning $100,000 a year and you say, "Josh, you're telling me I can only spend $10,000 on a car?" You have two choices.

Choice A is throw the advice out the window and go spend more money on a car and wind up less wealthy. If you become wealthy, it's a much slower process, not in 10 years, or maybe even wind up broke like many people do. Or choice B is use your desire for stuff as motivation to work and say, "I want a $100,000 car.

Okay, 10x your income." And for me, I've always found those goals incredibly persuasive. You want something? Awesome. Set yourself the rule of what you're going to do, and when you do this, you're going to go and buy it. And making that deal with yourself and saying, "I want this consumption item, so therefore I am going to work my tail off." That's a good thing, because then you wind up getting the thing and still getting richer along the way, which means you enjoy the thing a whole lot more.

Don't borrow money for cars. Stick to these rules. You'll become wealthy. And then finally, in line with the show, remember how to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. How does avoiding this allow you to live rich now?

If you free up the money in car depreciation costs, you can often spend that on other things. I know a lot of people that travel a lot. And one of the things that seems very consistent is people who travel simply make the intentional choice that they prefer traveling to driving an expensive car.

Remember, the depreciation on a $50,000 car, a 15% this year, is $7,500. If you avoid the depreciation, if you choose not to save that money, you choose to spend it, you can travel a lot on $7,500. So think carefully before you go and sign up for something that's going to wind up just sucking money out every year.

New cars always become used cars. Things that inspire that lust and desire quickly become, eh, they're old, they're scratched, they don't inspire that lust and desire. The older I get, the more amazed I am to watch this process. I remember in high school, I would go to car dealerships and get all their physical paper catalogs and I'd take them home and I'd dream about them and study them and look through them.

These are the cars that were my dream cars when I was in high school, the brand new ones that I just dreamed about. They all look like junky, white trash, poor people vehicles. And you see them out and I think, wow, what was wrong with me? Why was I so enamored with that thing?

So build some financial formulas that will allow you to have the things that you need but protect you from the regret of buying cars that keep you poor and broke. Are you ready to make your next pro basketball, football, hockey, concert, or live event unforgettable? Let Sweet Hop take your game to the next level.

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