Hey, parents, join the L.A. Kings on Saturday, November 25th for an unforgettable kids day presented by Pear Deck. Family fun giveaways and exciting Kings hockey awaits. Get your tickets now at L.A. Kings dot com slash promotions and create lasting memories with your little ones. Today on Radical Personal Finance, we talk cars with the cash car convert himself, Mr.

James Kinson. Welcome to the Radical Personal Finance podcast. My name is Joshua Sheets and I'm your host. Thank you so much for being with me today. Today, we're going to talk about cars, specifically how to make a good decision about cars. I brought on Mr. James Kinson, who hosts a very popular podcast all about that specific subject, how to buy them used and pay cash for them.

And today we're going to argue a little bit about whether you should or not. All right. I believe in truth in advertising, so I guess I shouldn't quite say argue, but we do have a little bit of a discussion on the on the topic. James and I come from slightly different points of view.

And although we agree in the majors, I think you'll enjoy this conversation. I was able to record this at the recent podcast movement conference in Fort Worth, Texas. So you'll hear a little bit of the background noise of the interview where we were doing the interview in a busy, busy hall during the middle of a conference.

But James is a real great guy. You're going to hear his story right at the beginning of it. He is recently converted to buying cash cars. He wasn't always that way, but he's recently been converted to that way of thinking. And you'll hear that come out in this podcast.

But he's an expert on buying cars. Having owned over 20 vehicles over the last 40 years, he's learned a few tricks in his own trades and he's built a podcast helping others to avoid the big mistakes. Here we go. So James, welcome to Radical Personal Finance. I appreciate you being here.

Thank you for having me. I'm pleased to be here. I have been looking forward to having the cash car guy on the show, the cash car convert. We have a lot of mutual friends. I know you're doing some cool stuff with your podcast and growing. Let's kick it off with your story with regard to money.

How did you become the cash car guy? Yeah. So to me it's kind of an interesting story because I grew up never really knowing how to handle money. My dad was one of these guys who would quit a job when he got mad. He never really worried about it and he always bought new cars or new things whenever he had more money.

So it was always, he was always upgrading lifestyle with more income. And so I was raised really poor. And then as I started in my work life, I just kind of assumed some of the same things that he told me. Like you're always going to have debt, you're always going to have a car payment, all those kinds of things.

So my wife and I, we make a good income, but I found myself about $70,000 in credit card debt and other ancillary debt. We had about $500 a month in car payments and I even had a loan against my 401k at one point. So really some dumb stuff. Was it just overspending or was there some, you had been disabled, some specific cause?

Just sloppy, just really sloppy, not paying attention and just allowing things to get out of control. And so so we, so, so I, I tripped over Dave Ramsey's book, Total Money Makeover. So I read that and and I, I told my wife, I'm like, listen, you got to read this.

I think this is going to, you know, this, this, this makes sense to me. And so she agreed to do it. And, and so from there I really started consuming all of his content, read all of his books, listen to his radio show every, every chance I got. And so finally, so finally I get to a position where I hear him all the time say, sell the car and buy a beater.

And, and even said at one point, this, sometimes I think this is the sell the car show. And, and I realized that I've, I've only bought one new car in my life. And I've spent most of my life driving used cars. And so I, so I said, you know, I really know how to buy used cars.

Maybe I could find a way to help people with this because Dave's not telling him. And I know that if you buy the wrong car, it's more of a curse than a blessing. So, so, so that was kind of the Genesis of it. And, and along the way my wife and I got out of debt.

We got our cards paid off. We bought a couple of other cash cars and and now we've got, you know, like an eight month emergency fund where we've been fully funding our 401ks and stuff for a long, long time. So that was the one thing we did do right.

Is we did do that. Yeah. Awesome. So now, so you've, so what was, it's interesting to me about, you've kind of taken on this as far as I'm concerned, like this tiny niche about paying cash for cars and you've expanded it into all this helpful content. How do you talk about cars that much?

Well, you know, it's kind of funny. I, if you, as, as people listen to my show, they're always surprised that there's so much more going on there than just talking about cash cars. I did do a number of episodes where I'm talking people through how I buy cars and how I would recommend they do it.

But then I also knew it was about more than that, that why do I want to drive a cash car? Why do I want to not drive a new car? And so I gave them some background about that. But then I also talked to a lot of entrepreneurs and about how they weren't, they would not have been able to start their business had they not been debt free.

And so I've had a lot of people on, a lot of business people, a lot of entrepreneurs telling me their stories about that. And so that's something else I'm weaving into the show. Yeah, I'm one of those entrepreneurs. If I, you know, if I had a high lifestyle, um, when I left financial planning and I launched radical personal finance, it's a, it's a jump in the dark financially wise.

It's not a, you know, if I were any other business, I would have a careful business plan with projections and whatnot. But this kind of business, there's no way to do that. So the only way that you can do that is if you're good with your expenses. And there have been so many people who are stuck in exactly that situation and they're not able to make a switch to a business.

Businesses as a rule generally don't make much money in the beginning. And the reason you hear about the big stories that did is because they're so rare. They almost never happen. So ignore the rare unicorn and just focus on what you probably can control. And one of the things is not to put too much pressure in the first couple of years out of a business to take too much out.

And if you've got a high lifestyle, you got a car payments, you got a bunch of debt, it, it sinks you. It does. And I think as I have talked to people and listen to people, so many people out there, they're, they're in debt to their lifestyle. They use credit cards, they buy cars with debt.

They may even buy a house they can't really afford. And they wind up in these situations where they're, they're just so deep in debt, you know, they, they may be miserable in their job, but they have no options, no choices. And so to me, all of the, the, the debt freedom is about giving you exactly that freedom, the choice to do what you want to do.

If you want to keep doing the job, you're doing great. You know, if you want to retire and play golf, great. But, but if you're, if you're not intentional with your spending, then that's going to be a problem. And I don't really care if somebody buys a new car or not, as long as they know that they're trading their future for today.

Right. It's just opportunity costs. And if you ask me the question, you'd be happy. What kind of car do you drive? I'll tell you my, my cash cars stories. I drive a Ford F one 50. Okay. What year? 2006. It's like you're, you gotta establish your reputation. You know, Ford F one 50 can be, it might be a 2015 Ford Raptor.

I was, I had the experience recently. I bought a couple of months ago for a long time. My wife and I've had one car and that was, I can't stand owning cars. I can't stand the work associated with them. I can't stand sitting in the tire place on Saturday morning, wasting a Saturday morning, having somebody replace my tires.

If I, as soon as possible, I will be one of those people who, well, I'll probably keep an old car around just in case, but I'll be one of those people as soon as we get to self-driving cars distributed through an Uber app. Like I'll use that instead of the, the, the practical side of me will probably keep the cars around for emergencies.

But but I'm, I just can't stand owning cars because of the work associated with them. So for a long time, my wife and I had one car, but then we were, we came across another, we came across a, I came across a deal on a 1998 Toyota Corolla and it was owned by a little old lady and it was in rough shape visually, but it was in good shape mechanically.

And I worked out kind of the value and, and I was able to get it for $500 out of my pocket and I took on some of the work associated with it. So I've been driving this car for a couple of months now. And the other day I had breakfast with somebody and as we were going out to the parking lot, I was watching, he was getting in his car and I'd been giving him some advice and giving him some ideas.

And I was getting into my car and I had to ask, I was asking myself the question, here I am getting into my 1998 gold little old lady Toyota Corolla. I was like, do I feel ashamed about this? Because it's a, it's an important factor. You know, there's a level at which if you watch how people handle these decisions emotionally, usually the emotions have much more to do than the finances.

The reason people buy new cars, my opinion is more often the fact that their old junkie clunker broke and they just get so frustrated. They say I can trot down to the Kia dealership and I can get a loan on a Kia Rio and $189 a month. I cannot have to deal with my car breaking down all the time.

And who knows, that might be a good decision. You know, you, that might be something for $189 you can get transportation. If you can effectively leverage that transportation, that might be useful for you, but it's probably not because probably you're broke in debt, have no assets growing and now you just bought a $15,000 car that in three or four years is going to be worth four.

And so you're just destroying your ability to grow wealth. And as I've watched this, so back to my Toyota, I was getting it. I was thinking, do I, do I feel like unconscious? There's still a tiny twinge of that. But the reason as far as like, well, maybe I should have a fancier car.

You know, Harry, I'm Mr. Fancy Pants financial planner talking about radical personal finance and whatnot. But what I immediately thought of is the reason that I have the car and the reason that I have the car is I can't stand losing money unless I just got so much coming in.

Okay, that's fine. But I'm not there yet. And I would rather own five rental houses and a $500 car than a $50,000 car and no rental houses. And I see this often happens in the way that people frame decisions is they don't frame decisions in terms of, of accurate decision.

If you were going to give somebody the framing of, you can either drive a nice car or and have a nice life, or you can drive a junkie car that breaks down all the time. Well, what idiot would choose the junkie car that breaks down? Right. But if you can frame it as you can either drive the nice car and have a life filled with stress and be broke for the rest of your life, but have a really nice car or you can drive the junkie looking car and have a lot of money and have a really peaceful life, then a lot more people are willing to choose that.

And it's all about the framing of the decision. Well there it is that, and I'll tell you another thing that I think about it because I do think people wrap their egos in their vehicles, right? I mean, that's how when they have commercials for their vehicles, the new car dealers don't really spend that much time talking about the vehicles.

They show all these sexy photographs, right? Great lifestyle, tough truck, whatever it is. So, so there's definitely a factor there, but, but you know, between the two options that you put, I'd say there's a C, right? There's a B and there's C. I can help people buy cars that they're not ashamed to drive.

Now they wouldn't be 500 I'm going to say between three and $5,000 I can find you a good, reliable car that you're likely not ashamed to drive. And, and, and even at that, even if you are, I say, do that and then take the money that you would have been making in car payments or were making a car payments and pay those to yourself first to build up kind of a car emergency fund.

And then secondly, to buy your next cash car until you get to a point where you're happy. And my opinion is most people between 10 and $15,000, there's a point where you're going to find a car that's good enough for you. You know, unless you just really have an ego.

Because we're talking about need versus want here, right? And, but even at 10 to 15,000, there's a certain amount of want because you can definitely get by with something less, but there's, there's just so many great deals out there. And I think that the challenge is that people have been raised with this idea that they're always going to have car payments.

Therefore, why not drive the nicest car I can. And that's why I think, um, getting into a bit of another area here, but that's why I think leasing is so popular because people say, what, well, wait a minute. You mean I can pay, make the same payment and I can drive a nicer car.

I mean, I can drive a Mercedes or something and pay the same payment I was going to make on a Toyota. Wow. I'm all in, right? Give me that for three years for the rest of my life. And, uh, and I think that's kind of insidious, but, um, but I think that's, um, to me, I think there is that third, third option where you can drive a decent car.

You can upgrade it to the point where you're happy with it. And then you can take those payments you were making. And then instead of investing them in a car, start investing them in yourself, uh, in your, your retirement, in your children's education. And I view car payments as investing in somebody else's future.

You're investing in the bankers, the auto manufacturer, you're investing in the dealerships future, and you're not investing in your own future. You're driving a nice car for a little while, but, but you're, you're, you know, you're trading your future for that. And so I tell people, Hey, take that car payment you're making and pay it to yourself.

And over, you know, 40 years, the average car payment in America right now is $484 a month. So, and most people have two cars. So there's probably a used car in there for maybe another 300. And so you take something like, you know, but five to $700 and you multiply that over 40 years at 8% interest, you get over a million and a half.

Well, just the, just the four 84 is more than a million and a half dollars over 40 years. Huge. Yeah. Why do, why do you think we put so much of our ego, why we gain so much of our self worth specifically from cars? Yeah, that, that is a bit tricky.

I think a lot of it has to do with the way Madison Avenue advertises and it works, right? So you've got, you know, the smartest advertising people in the world trying to convince you that you need to have that new car, that it's going to make you more popular, sexy.

The women are going to want you, et cetera, et cetera. Right. I also think if you, if I look at the people that get the most destroyed by it, and I'm one to say you spend your money, how you want to spend it. And just consider the choices. And if you decide, I mean, there's some people who really are love cars, but I think in my mind, you can pick those people out and that's just what they choose to spend money on.

That's fine. But there's a large portion of the population which seems to be in that regular cycle. It's not so much that they love the car, it's just that they do it. And I think sad, a lot of people just haven't found a place of ego in something else.

We always are drawn a couple of months ago on some of my listeners sent me a story about this major league baseball pitcher who just signed a couple of million dollar contractors living in his, his Volkswagen van. It's quite popular online. We're amazed by people like that. When I look at them though, the key in those stories is that people are confident enough in something else that they don't need to try to project an image of something that they wish they could.

So if you're confident in your career, if you're confident in who you are and where you are, if you're confident in the love of your family, the appreciation of your boss, the love of your clients and customers, who cares about the car there? You just get into a utilitarian perspective of what's a reasonable way for me to get down the road in a way that is accustomed to what my needs are.

Right, exactly. And, and, and you're right. Most people don't think that way. And, and, and again, I think it's just the way people were raised. We don't, um, you know, it's just so normal. I mean, having a car payment, nobody thinks that's a bad thing. Right. Right. And, and so, um, you know, people are all over student loan debt right now.

And I know it's a huge problem for real, but did you know that in 2014, uh, there were more dollars attributed to auto loans than there were to student loan debt in 2014? I didn't know that. Yeah. Most people don't, right. And you never hear it, but car payments are normal.

It's not an, it's, it's not a bad thing. Right. And, um, and so it's, it's not stigmatized in our society. So people blindly go around. When I look at the average numbers, the average household earns about $46,000 a year. Uh, the average new car is $33,000 and, and, and, and those numbers don't close.

The average wage has fallen about 6% since 2008 cars have gone up about 12% since 2008. Interesting. Right. So now what we're doing is we're getting into six and seven year car loans more as the norm. So about 30% of cars are leased and about another 30% are extended length loans.

Wow. So, so to continue to sell these new cars to people and to keep the payments under control, more and more people are getting upside down in car loans with these longer term loans. And on top of that, they're leasing. So they wind up at the end of a lease with nothing, which is better than coming in upside down on a car loan after three years and trying to trade it.

What advice would you have as far as the actual car buying process? So for me, um, again, because I have this used car skill that I've learned, um, and I'm trying to help people, uh, with this Dave Ramsey thing, right? Where he says buy a beater. I'm trying to help people buy a better beater.

So I have an opinion all the way up, but let me start at the $5,000 and below car for that one. What I recommend is you buy from a, uh, an individual, you, um, you look for a one owner car, possibly two with records. And, and then you go out and you, uh, meet the, the individual who actually did the, uh, who owns the car and you want to go to their home and you want to see what their yard looks like.

Is it neat and trimmed or the bushes trimmed? Is the house clean and painted? Or is it a wreck? Because I don't care how good the car looks now, 30 days ago, it looked like this house, right? People are consistent, right? They tell you who they are and when they do, you should listen.

Right? So, so a lot of my car buying at that level is where I'm really trying to move the needle. And, and I tell people how to inspect cars. And I also tell them, take it to a mechanic and have it checked. Right? Because that's like a hundred dollars and it's like cheap insurance for, for, because if you buy a three to $5,000 car and then you have a $3,000 in a transmission problem and you're already doing this because you're in debt up to your eyeballs.

So, so that's the below 5,000 between five and 10, I say still your individual is your best bet, but you can find good cars at dealerships. And then above that, I think you can, you can go to a dealership and find a decent vehicle for sure. The one thing that I say that it's a little different is that I say buy from a new car dealership that sells used cars.

And my rationale for that is, is that they get more trades and they have a big reputation tied to a major brand. And so they can wholesale a car that's a problem for them. So why would they keep a car that's not a good car on their lot and sell it to you and maybe have some problem where you're going to, you know, they're going to show up on the nightly news, one of these gotcha, you know, expose.

So, so it's just, again, it's just about making little tweaks to try to move the needle a little more in line with the person that's buying it. Because I was listening to one of your episodes on car buying and you were talking about how it's in the information is asymmetric, right?

The person selling has all the information. While I'm trying to even that out a little bit by saying, get a car that's got records on it, right? You can do your car facts work. Then you look at the records that the person has. And I'll tell you something else.

It's almost like poker. You're, you're buying based on the person as much as the car people you can tell when you call them, they have a pride of ownership and they just can't wait to tell you all the things they did to this car and how, how, how well maintained it was.

And oftentimes you find that they bought another of those exact same model. So, so those are the kinds of things I do to try to tilt in favor of people. And obviously, again, I don't care if people buy new or used as long as they pay cash. Although I do agree with Dave Ramsey and Dr.

Thomas Stanley, that unless you're a millionaire, you can't afford a new, a new car because the depreciation just kills you. What if you have to buy quick? Cause this in my mind is the major problem of the used car market. So my $500 car, you cannot find those deals on a regular basis.

Generally a car in the thousand, a couple thousand range. I mean, usually it's a piece of junk that you don't want to drive. Right? Those deals are not available. That's purely a timing thing. That was why I bought it because I have looked for, for at least 10 years.

I've had my eyes open for a four cylinder manual, tiny little car that was cheap, that was in good condition with manual windows. You can't find them. And that's the problem often is that people can be in crisis in a crisis situation. And the process you just, you just described takes time.

It takes effort, it takes work and it takes money. How do you do it when you're in a hurry? Yeah, I, I don't know that there's a great answer when you're in a hurry. Although I will tell you, and again, when you talk about finding a really good car below, you know, $2,000, I think that does require a lot more work, right?

But I would challenge that between that three and $5,000 range, it's not that difficult to find good cars. Now it's a lot more money, obviously. But, uh, you know, for somebody who's just in debt up to their eyeballs and they're just really struggling, um, you know, I, I think it's going, they're going to have to do some things to, to pull that cash together.

And, and again, I would advise them, um, uh, to take their time and buy the right vehicle so that they don't get themselves in even more trouble than there are in. Right. So, you know, making a quick decision on it, um, it can work. Uh, but, um, but, but I'm trying to, I guess I'm trying to cover a couple of things for people, right?

I'm trying to get them in a car that they're not necessarily ashamed to drive so that they will do the right thing longer and not have a car breakdown. I, I'm with you. If, if a car, um, doesn't look good, but it runs good, I can still live with that.

Um, I went through a car situation where I went through a divorce years ago and it was very, very painful. I had a Lexus LS 400 at the time that as the divorce drug out and progressed, I couldn't afford, and it was killing me and I couldn't sell it because it was part of the joint community property.

And so when I sold that car as soon as I could, um, a friend of mine knew somebody who had a Saab 9,000, 900, and it was at that time about 12 years old, but it was in great shape. Um, both inside and out and mechanically. And I got it for $2,000 and like you say, that was just kind of, I knew a friend of a friend.

It was a good, I was kind of lucky about that. But I will tell you, once I made that switch, having had the pain of those car payments and I went to that vehicle, I just felt so much smarter driving it. Right. So you, I did have a little ego issue, right?

I'm driving. I went from a Lexus to this Saab and, but I just felt like I was looking at all the other cars and I knew there were so many people out there driving nice vehicles because they can't afford it. Right. And I've read all the Thomas Stanley books.

So I, and by that time I had already read millionaire next door. So I knew that even though I see people driving Mercedes and Lexus and so forth, I know most of them, uh, they're not saving any money that they look wealthy, right? That's the income affluent as Thomas Stanley would put it.

And that those people, uh, they're not really, um, they're not really rich. They're in debt up to their eyeballs. They're, you know, if they lost their job for a month, they would probably be in deep, deep trouble. And, and, uh, so, but it's just kind of funny. I learned that lesson and then of course I immediately forgot it when I sold the Saab two and a half years later, I went right back to a car payment.

Yeah, exactly. I don't know what it is about human nature, but you're not the only one. No, lots of, and again, I just think society accepts a car payment as being normal. Nobody's sounding warning bells, not many. I mean, you can find articles about, uh, about the, um, the bubble that's being created by the car loans and subprime borrowing, but you know, it's not going to have nearly the impact that the housing crisis did.

And so most people aren't even writing about it. Yeah. I have been seeing some articles about it as far as subprime car loans being a new, a new area of debt. And it's definitely, it's a, it's a beast because once you get into it and when you've, I don't know if you do any, do you do any personal financial coaching?

Like for individuals? Okay. I've been in a few of those situations working with somebody and when you're trying to unwind a series of bad decisions, cause I think in general, many times you always have to, I'm, if you've listened to my show, I'm always very hedgy because I could tell you stories of a person specifically who, she looked great all the time and drove a big fancy Mercedes.

And when I did financial planning, she was broke, broke, broke, broke, broke. And the only thing she had like was the, was the Mercedes. But then on the other hand, where I live, it's an extremely affluent area. And so you can't assume, Oh, there's someone driving the Mercedes. For all you know, the person made a couple of million bucks last year and an $80,000 Mercedes is whatever.

They go buy a new one every year and it makes no difference to their financial life because the numbers are so extreme. So I always try to be careful to them and to talk about that. But talking about someone who's a median income, maybe two median income. So, so family, two $45,000 incomes in the household, $80,000 ish so double median income of household.

When you get into that world, what happens is you're not rich enough to where you can just take care of cars and it's no big deal. And you're probably not setting enough aside to where you're going to be so rich. And so that's where the car payments are really devastating because it's primarily the fact that you're, you're buying a lot of car that's depreciating in value.

And I think of it like this, take the ratio of the amount of money you're putting in a Roth IRA and take the ratio of the amount of money that you are spending on a car. So if you buy a $40,000 car and then, so let's see if I can do this math in my head, $40,000 at 15% depreciation would be 1500 times four would be $6,000 depreciation in the first year.

So you buy a $40,000 car and you suffer $6,000 depreciation in the first year. Meanwhile, you're over here very excitedly putting $5,000 in the Roth IRA, but you just wiped out the $5,000 with the car. And people don't think about that as a perspective. Everyone is very, I mean, I'm feeling good about myself putting $5,000, but over here about a $40,000 car.

So in the median income space, it's primarily about the lost potential wealth and it's less about the financial emergencies. And my observation experience, the emergencies come in divorce and business bankruptcies and dual layoffs. Most, many families are not, are not so crazy that they just got loads of debt.

But when you drop down a little bit and you drop to maybe one median income household or you drop down to just a little bit lower in the income space, what happens is it starts to pile up. And so you buy a Kia Rio and then you drive that for four years and then you trade that in, but you trade it in and you got a little bit more payment.

You go into the next one, next one, next one. And then you've got a situation where you've got a $30,000 car and $42,000 of payments. And now you're trying to say, I got to get out of car debt. Well, how am I going to do that? I got to come up with $12,000 out of pocket.

I got to sell the car in the private market. I got a range of a, a transaction in which the title and have the title. I got to sell it. And I got to come up with $12,000 of cash for now. I've got to get an unsecured loan plus, or I got to save 12,000, which is unlikely.

Plus now I got to get caught up. I got to come up with money to go and buy a cash car. And that's where it's just devastating to try to help somebody unwind it. It is, it is. And that's, yeah, I, I, I'm hoping I can catch people before they get to that point or, or even the more affluent people just to make better decisions.

Uh, because there's so much pressure when you make a lot of money to live a fancier lifestyle, you live in a, a, a neighborhood where it's more than norm. Like you were talking about where the, where the Mercedes are. And, and, uh, you know, although I do find it interesting that about 50% of the Mercedes are leased.

So people really, you know, they're not paying cash for them with their, with their millions in most cases. I would, I would lease a Mercedes if I were a millionaire though, even though it's financially not from the convenience perspective. I, I can, that's the situation in which I would lease.

Um, just from the pure convenience perspective of it. Yeah. It's definitely more expensive, but it's, but when your time is, is in other places, like I, if I were, if I were driving a standard car like that, I mean, if I were driving a standard car like a Mercedes, just a sedan, these kinds of things.

Right. And if I was extremely wealthy, I would lease, um, simply because of the convenience factor, assuming I had enough investments in other places. Sure. Sure. Um, so, but, but that's not that's, that's after becoming wealthy. And the problem is when you're the kind of person who makes decisions that make you get wealthy, then you're less likely to say, I'm going to do a decision.

Exactly. And what I'm, what I find more than not is that people want to look wealthy before they are wealthy and therefore they never become wealthy. Exactly. So it becomes this horrible thing. And, and again, I mean, I learned all the wrong lessons and lived it that way for a long time.

My wife and I make a really nice income, but we were just some really stupid stuff with our money. We weren't being, you know, we played tennis tournaments all over Texas and that was costing about 700 bucks a month. And, you know, we were doing on top of everything else that we had going and we have some rental property and we hit some hard times on our rental properties and, you know, cause we were working and traveling so much, we weren't paying attention to those.

So that got us in some trouble. So, you know, we had all these things pile up and, you know, like I said, we just look up and we've got all this debt. And so I, you know, I'm trying to, you know, talk to people who, who aren't wealthy, but they make a good income and they, you know, I mean, I, I want to help everybody, but I think I have the most potential to help people who have an income and, and can just make better decisions.

If they can just get their ego in check and say you know, I don't, you know, I guess it's, you know, Thomas Stanley used to put it this way. You've got the income affluent guys who drive a Mercedes, but they tend to drive the lower end Mercedes. Right. And then you've got people who are really wealthy, the, uh, the balance sheet affluent and they don't just own one Mercedes, they own five and they're all paid for and they're all, uh, you know, the highest end models of various sorts, or maybe they have five cars, ones of Mercedes, ones of Ferrari, ones of whatever.

So the people who are trying to look wealthy can't really do the job anyway. They buy one of a low end and that doesn't really represent what the wealthy are really doing. Uh, and, and, and then of course, you know, a lot of the wealthy people, um, uh, tend to drive in the, in the last book Thomas Stanley wrote about it.

Um, in the last year, uh, a Ford F one 50 and a Toyota Camry were the two most popular vehicles purchased by millionaires. Now these are, you know, a deck of millionaires, right? So they're not the billionaire Donald Trump type glittering rich. Yes, that's right. That's the term he used.

Exactly. And that's an important distinction. And I should clarify my leasing comment. Um, I'm assuming in that case, glittering rich. Yeah. If I were glittering rich, the point is most of us, maybe there are a few people, most I'll pick on, um, our mutual, uh, uh, mentor, Dave Ramsey.

Okay. Um, we've all, we've probably all seen the pictures of his house, right? Okay. Um, the man lives in a mansion and it's beautiful. And I think if that's what he wants to do, great. Yeah. Um, but I'm not impressed by the fact that he drives a used car.

If he still does, I don't know. Or the fact that he owns a car and doesn't lease it because the AC bill for his house is way bigger than the depreciation on the leased car. Yeah. And that's the point I'm making not to be mad at Dave. He can do what he wants, but it's a matter of scale.

And so the reality is most of us are going to have some things in our life that are not the most efficient and there's a lifestyle considerations. Um, you know, I don't know if you stayed at this hotel, but at the Omni, but there's probably a motel six 30 miles away that we could stay at.

Yes. And we could stay there for $30 a night instead of whatever the cost is here. Right. So just because, so what happens, what I object against in the finance space is that people often have the idea that you should always spend the least amount of money. Well I'm not staying at the hotel.

I found an Airbnb that was close enough so I could save some money, but it's not the motel six because I'm not in the stage where I still need to be at the motel six. Right. And so the things about buying and leasing, once you are already wealthy, then you can make the decision, but you can't do as Dave would say, you can't do poor people's stuff and expect to be poor people.

Excuse me, expect to be rich people. You're just going to keep poor. And cars are one thing that keeps many people poor. And so once you become the kind of person who recognizes that, then the importance of the car just kind of diminishes for most people. So once they're rich, it's like, well, I don't care whether I drive a Toyota Camry or not and I'll just go buy a Toyota Camry and every seven or eight years I'll go ahead and just buy a new one.

It's not a big deal. Yeah. There was a billionaire on, uh, on Fox news the other day that I was watching and he, or Fox, excuse me, Fox business. And he was talking about the fact that, uh, that his car, he's got three cars, two of them were really old and one of them he finally got enough that it had a Bluetooth capability in it.

And that's his fancy. It was like a 2008 or something. And this guy's worth 3.9 billion. And, and the, and you know, even I am looking at that saying, why, why wouldn't you buy something that's new and drive it? It's just not, it's just not a priority for him.

Right. And, uh, I mean, and I am a car guy. I mean, I like cars a lot. I've owned a lot of sports cars when I was younger and stuff. And, uh, and I've learned a lot of lessons along the way around that stuff. Um, and so it's, it's, I'll be honest, it's really easy for me.

Um, you know, being in my late fifties to say, um, you should drive a, a, a lesser car and be smart about it and stuff when I'm not out there trying to find a girlfriend, you know, I'm not out there, uh, you know, trying to meet people and I'm not starting my career where I may need to impress people.

Um, you know, that sort of thing. Um, and, and, and, and again, even at my age, uh, with all the things I've learned through my life, I still feel that twinge of ego every now and then, or the desire to have something that's nicer. And my wife and I could go out and pay cash for, um, you know, some very, very nice vehicles, but we don't want to do that.

That's not what we're choosing to do. And, and, and that's, I, I, I want to educate people that they have the choice that, uh, car payments are socially acceptable in the, in our society. And I think they should get a lot more focused because I think it destroys the wealth of these, you know, median to middle to high income people.

Um, you know, the lower end people, I mean, when we were really, really poor, we couldn't afford, uh, we couldn't get a loan. You know, I bought my first car for cash cause I didn't have any credit. But these days, um, and you were talking about the median income.

So the average household income is about 46,000. The median income for an individual in the United States is $27,000. So it's a very low number. And so you think about that, half the people in the country make less than that. Go out here and see what kind of cars you see driving the streets.

And, uh, you will see a, what appears to be a lot more than half of them driving new or newer vehicles. And that's the thing that's got me concerned. Um, and again, I wouldn't have come to any of this if, if, if Dave hadn't been telling people sell the car and buy a beater.

Um, because I, I wouldn't have thought of it this way, but once it hit me, I was like, okay, the, these car payments are killing these people. He's telling them just go buy a beater. And I'm like, if they buy the wrong one, it's right. It's, it's again, I'll, I think I said it earlier, but you know, it's more of a curse than a blessing.

Right. And I wanted to try to help people make decisions that would bless them. But you know, there's still lots of unanswered questions. You still have to take a second job or whatever to save the money to get it. You have to suffer a little bit for that. Maybe you do have to start at a $500 car and work your way up to, to a two or three or $5,000 car.

Um, but I got to tell you if you're $70,000 in debt and 50,000 of it is two cars, you can put a real dent in that, in your situation by going to a cash car. And that's the other thing I think it helps move the needle for people. Uh, when it, when we were $70,000 in debt, that was really unsecured debt.

Our car payments were on top of that. Right. So here's a topic. Don't feel any need to agree with me because I'm interviewing you. Uh, but this is something I've struggled with and it connects to the three to $6,000 car level and it also connects to leasing. And here's the, here's the scenario.

I've tracked, I've kept records on my cars. Um, total cars. Here's all the cars I bought in my life. First car I bought was a 1993 Honda Accord, a 993,000 miles when I bought it, $2,000 purchase price, sold it with 315,000 miles on it. And, uh, $1,100. Uh, that car cost me, I amortized out all of the costs.

That car cost me total, not including fuel or insurance, but just simply the cost of ownership. That car cost me somewhere around $250 a month. By the time I accounted for all the repairs, um, I bought a 2006 Ford expedition. I can't remember what I paid for it or what I sold it for.

That one was a pretty decent deal as far as no major repairs, but it was a butt kicker on the depreciation. Um, it had already, I think it was 12. I bought it for, sold it for 7,500 and I put 50, 60,000 miles on it, something like that. Uh, so I lost a bunch there, bought a Hyundai Entourage minivan, five grand, uh, paid for that.

And then I bought my $500 car. Um, so I'm, I, that's where I'm at this stage of my wealth building journey. I'm not willing to waste money on more expensive cars, but I try to keep records and try to figure out, am I making good decisions? Now, most people don't keep records on cars and that's where it's so difficult to get good data because you get into this marketplace and it's okay.

Like my Honda Accord, when I replaced the timing belt, that's $900 repair, but that's gotta be done every a hundred thousand miles. That's not the car breaking down. That's just normal maintenance. Yes, exactly. The question I've had and I did this analysis for a friend of mine who his car was like a 2000 and six, um, Accord something like that.

Almost it was the perfect car that probably you would suggest or like this perfect good enough car, five, $6,000. And we were going over his repair bills and he's someone, he takes care of cars. He's not extravagant, but just repair bills. And I averaged out the depreciate. I pretended we sold it and I averaged the depreciation and the repair bills and it came to $360 a month, something like that.

And I'm sitting there looking at that and I'm saying, this is, this is what, this is the car that I would suggest to somebody. This is that perfect good Honda Accord quality brand name, not going to break whatnot. I'm looking at this list of repairs and I'm thinking like, this is nuts.

So back to leasing, I looked at it, I said, here are the financial ramifications I'm ignoring. This car has cost my friend 360 something dollars a month, about that number. And he's driving this 10 year old Honda Accord. He could go and lease and there are some sweet lease deals out there, especially if you can get them on a deal.

And this is where I, why I don't like the always buy, always lease rule. A few years ago, the Chevy Volt, the Nissan Leaf, some of these, I mean, the carmakers, when they got to move a car, they dumped the lease cost. And if you can get some incentives and whatnot, you can really do well there.

But I'm looking at it and saying, just, he just trots down. I mean, it's 300 and something dollars a month here and it's 300 something dollars a month here, but here he's got to deal with all these repairs and then all these things. And I'm wondering if the advice, the long winded way to give you some details.

But the question is I'm wondering if my advice needs to change and I'm trying and I'm wondering that by looking at the numbers of how expensive it is to fix many cars and the days of being able to pull pop the top pop the hood on your 1986 Chevy pickup truck and replace the alternator for 30 bucks down at Benadotto parts.

Those days are going away. And I wonder if it's not better to be up in that beginning curve where the car is just going to work and you've, at least you've got a fixed cost instead of the unknowns. What do you think? Do you think our advice is going to need to be changing as time goes by?

It might as you get self driving cars and some things like that. I think it could have to change and I, that's going to be a really sad day because if people don't have the option to control the cost, they're definitely going to lose their wealth to, to cars.

You know, unless in your scenario, maybe they're using Ubers to come and pick them up with driverless cars. Maybe that'll help defray the cost some. But, um, but, but I, uh, I haven't, um, uh, gone back and calculated on how many of my vehicles, but I just did with my truck not terribly long ago.

And, uh, in terms of repair bills and I've owned the truck now, uh, it's four years. It was three years at the time I did it cause I did it about a year ago and I had only done standard maintenance kinds of things, oil changes and stuff like that.

I had done the brakes myself. Um, so I, so I spent about $400 on the brakes would have been about 11, but I've had no major repairs that vehicle I haven't, I've only driven it about 60,000 miles. So I haven't driven it enough yet to need to do a timing belt or something.

But you're, you're right. That is part of the normal maintenance. But, uh, you know, unless somebody is going to do, um, a lease where they're always going to have a car payment. And I, and I have a friend who was big on the leaf. They, they had, um, $198 a month car payments for the lease.

Right. And, uh, and, and the thing that, the thing to me that's insidious about that piece is that that gets you into the lease. And now when you get the next car, maybe there's not a deal, right. And now you're, you're hung up. Right. But, but, but, you know, for some people that will be an option.

And so, you know, like I said earlier, my deal is I really just want, want people to go in with their eyes wide open. I do think, and I agree with you that, you know, I would have recommended the guy get the Honda and so forth, but you know, like anything else, Hondas can make some bad cars too.

So, um, I don't, I don't know the circumstances of him buying, but I think, um, and Todd trusted her. And I talked about this when I had him on my show a while back that he never buys a car until it's like four or five years old, because he wants to know the track record of that individual vehicle and as well as the model.

Right. And so if you can get records and you can see that somebody has maintained it well over a hundred thousand miles, like my truck had 109,000, I wound up buying it from a dealer because it was, um, you know, I don't know, I think I got it for $14,000 and it was, um, and so I didn't have a lot of history on that one, but I really like being able to look at the history and see that somebody has done all the things that you're talking about.

They've owned it since it was new. They did the timing belt at a hundred thousand and so forth. And then, you know, I think, um, you know, just past a hundred is a good place to buy because that gives you a good runway, right. So that you can do that.

Um, and, and if some, some people may do it early so you can kind of look at that, um, that people will, will want to sell a car at a hundred. I, a guy, I interviewed Jim Munchback who was a, um, uh, uh, master mechanic said he calls it the a hundred thousand mile myth.

And, uh, and so he says, I've gotten a lot of sweet deals on cars, buying them at a hundred thousand miles. So I think that's a good spot. Used to be the lifespan. Yes. I think two 50 is the new hundred. Yeah. Yeah. I'm with you on that. And that's what I tell people is that, uh, especially, uh, if, if somebody has got a car that's paid for and they're coming to me saying, Hey, should I buy a new car?

And I'm like, well, let's do the math. And, and I, I use Edmonds, uh, depreciation tool, right? So it actually says most of the time it's like 20% the first year. And I know it varies, you know, like a Hyundai, right. It's probably gonna appreciate more than a Lexus, et cetera.

But, um, but, but it, it, it, it almost never makes sense to trade in a vehicle based on a single repair, right. Given, and buying new, because you know, a $33,000 car based on Edmonds, uh, loses about $8,000 in depreciation. And then on top of that, uh, now you're going to make the $484 a month car payments.

You're $13,000 out the first year. Median income is 27 for individual. The math doesn't work, right? You're never gonna get that. And, and, and those are the, and oftentimes, those are the people buying. I mean, my first car, I made $8,000 a year and I bought an $8,300 car.

I mean, maybe I made 8,500, right. And I bought an $8,300 car. I was living at home with my parents. I mean, but that's what people don't get about the millionaire math. And I wish people would focus on it. If the guy who's, let's say you've got $10 million.

If you go out and buy a hundred thousand dollar car, and if you take that ratio, I'm not gonna try to do it in my head, but you take the ratio of what that means. If you make a hundred thousand dollars a year and you take the percentage that a hundred thousand dollar car would be of the millionaire, that's the kind of car you can afford.

And the same thing with houses. People look at a million at a mansion, like, like Dave Ramsey, whatever his mansion cost him. I guarantee, well, I can't care. I hope, I'm pretty confident that if you were to compare his net worth to his house, it would be way, way, way, way less than me with my $250,000 house compared to my net worth.

And the point is people, you get rich by buying investments and not consumption items. Bingo. Yeah, it's pretty simple. It really is. And so, you know, and you said it's that opportunity cost. So every dollar you're putting into that car payment is something that you're not putting into your retirement.

You're not putting an investment property. You're not investing the stock market. You're not investing in your child's future. And, and, and, you know, it goes back to the old, uh, you know, if you want to see where somebody's heart is, look where their, their money goes. Right. So, uh, some people just love their cars more than they love anything else in their life.

And, and, and, and again, there's no stigma about it in society. I have a friend who went through Dave Ramsey's financial peace university, sold a Mercedes and got a Honda CRV. And he, he says now when he drives around and he looks at all these fancy cars, he says, he, he pictures them with a bubble behind them, dragging, uh, some debt behind them at some level.

Right. And, and, and, and, and you're right. It's not always the case. There are rich people who, you know, uh, can make whatever choices they want and it, and it doesn't impact them. Dave Ramsey tells a great story about a guy who's, um, who's worth like several billion dollars and he gives away, um, you know, like $300 million a year or something.

And he bought $120,000 vehicle and some of his more conservative Christian friends like lambasted him for it. And Dave Ramsey's like, as a percentage, that doesn't move the needle for this guy. It's just like me buying a latte at Starbucks. Come on people. Right. Yeah. So, so it is about that scale.

If you're making, you know, $50,000 a year as a, as a household, um, you know, you probably should be driving $5,000 cars. It's 10% of what you make every year. Right. I mean, yeah, I was just going to say, I've, I think rules are thumb. I think the first place I stole it from Sam at financial samurai.com, he wrote about the 10% of income rule.

And as soon as I read it, I immediately said, yep, I'm going to take that one. That's the number. You make $50,000 that you can, you can buy, you can own cars. Dave Ramsey would say 50% of your annual income should be the total value. That's his number. That's fine.

That's better than many people. I like the 10% number. This is the radical personal finance. I like the 10% number. Take your annual income. If it's a hundred thousand dollars, you're allowed to own cars that are worth $10,000. Right. And if you do that over time, what's happening is you're putting so much extra money toward the investing side of the equation than you are towards the consumption side that your ratio, your net worth is just going to massively increase much more quickly.

Now, if you want to make it 50% fine, but the point is have a number. And I like rules of thumb like that as a starting place. Because with that, think about how every person, if you, if every person is listening, they can't, you can't unhear that. What I just said.

So if you go and you're thinking, everyone did the math automatically in their head, as soon as I said it, I make a $6,000 car. Well, without that, you trot down to the Toyota dealership and you're thinking, all right, Toyota Camry, I get this thing. It's $24,000. It's two years old.

This is really great. I've, you know, I'm buying, and even if you're paying cash for it, I'm buying a cash car, a Toyota Camry, $26,000. This is against two years old. It's already lost. You know, depreciation is great. It's a good deal. I got a good service package. I'm making a great decision.

Maybe. Yeah. But you're still facing the fact that as compared to your income, you're buying an expensive car, right? Better for you to buy a $6,000 car, raise your income to 260,000 and then go get your Camry. And by having a different starting point, it completely changes the decision paradigm.

And I think people make a better decision. I do too. I do too. I mean, there's no challenge to the status quo out there. I mean, you know, I have a friend of mine who, uh, he's got his MBAs and he's in the finance world and banking and all that.

And he's like, I really like what you're doing. He goes, but man, you are taking on two of the most powerful entities, the car manufacturers and the advertisers. You are in an uphill battle, my friend. That's right. You got a good enemy and a good enemy is a good, is a good thing.

Well, James, tell everyone about your show and where to get it and the name and kind of what you talk about. Cause I think it'll be a good resource for the listeners who would like to dig deeper into some of your content. Sure. So, uh, it's cashcarconvert.com. Uh, you can also find me on Twitter at cashcarconvert.

Uh, I have a Facebook page, uh, which is cashcarconvert. And then I also have a cashcarconvert community on Facebook. So it's a private, uh, community, but you know, just ask to join. I'm just trying to keep the spammers out and the show itself. Um, I, I detail how to, how to step by step by an inexpensive car.

And then, um, I have people on who, uh, make choices that have allowed them to have entrepreneurial careers. And I do some inspirational things as well, because I think, uh, uh, as Tom Corley talks about rich habits, you know, it's our habits that, that really, uh, define who we're going to be in the long run.

And so I want people to be people of excellence. And as part of that, I think they should drive a cash car. And, uh, as I say, invest in themselves, not others. Keep fighting the good fight, man. We need more of you and fewer of Madison Avenue. Thanks for coming on.

The car decision you make will have a profound impact on your financial life. If you're not yet a multimillionaire, if you're a multimillionaire, well, it's not probably going to have that big of an impact unless you buy a collectible. It's a few hundred grand, but for most normal cars, uh, you need to be a multimillionaire by the time, uh, before you start to get into that world.

So I hope this has been helpful to you. I hope it's helpful to you to think about it. I hope you can look at your own decisions and either feel good about them, or maybe just consider if you'd like to change something, uh, if you'd like to change something, get after it, uh, go check out James's show.

It can be a great resource. He dives deep on this subject. Uh, and I love, check out some of the interviews he's done, uh, where with people, and talking about the impact that this has made on other entrepreneurs. I know for me, if I had car payments, I couldn't do what I'm doing as far as an entrepreneur.

I mean, just imagine trying to come up with, what are we at with Patreon? A couple, just over a couple thousand bucks a month. Imagine if I had seven or $800 a month of car payments in my household, that would be the bulk of my income from the show, uh, put towards car payments.

That doesn't work. Uh, but by not having car payments and thankfully I've never had one, but not having car payments, it frees up time. So I ought to tell James to interview me on his show. James, send me an email and come interview me on your show and we'll talk it.

I'll tell you my story. I'll be one of your entrepreneur stories or wait a year until, uh, until we hit the big leagues. And then, uh, and then I'll be glad to come on. So thank you all so much for listening. Check out cash car convert.com for all James's info.

And you can find them in all the podcast directories. Uh, I'm sure. So wherever you listen to me, you could probably find him. Just search cash car convert. If this has been useful to you, I would appreciate your financial support and your patronage for details on that. Please go to radical personal finance.com/patron, bunch of ideas and options there for you, uh, to be able to support the show directly.

Radical personal finance.com/patron has all of that information. And I would thank you if this information has made a difference in your life. Here's the deal. Think about how much money I've saved you every day. Take about 10% of that a month on a monthly basis, and then send it to me.

And then I can put gas in my car and keep doing the show for you. Cheers. Y'all. Sweet hop is an online marketplace curating the best in premium seating at stadiums, arenas, and amphitheaters nationwide with sweet hops, 100% ticket guarantee, no hidden fees and the personal high level service you expect with a premium purchase.

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