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Abstract

o that she can start thinking about a mortgage.</p><p id="a5e6">I was so depressed I quit YouTube and haven’t reopened it all day. I am depressed by her life story.</p><p id="c494">Unfortunately, her story isn’t unique, because so many people fall into the trap of rewarding themselves with things they can’t afford. For some reason, people have a certain feeling of entitlement that allows them to think they deserve things they simply don’t.</p><figure id="af45"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/1*4PQ7o8F8f8ySjLtSosel9Q.jpeg"><figcaption>Photo by <a href="https://unsplash.com/@carlodagnolo?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Carlo D’Agnolo</a> on <a href="https://unsplash.com/s/photos/car?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Unsplash</a></figcaption></figure><h2 id="a174">My World View</h2><p id="dd09">Here’s my world view. I can’t afford a BMW because I can’t buy it outright; therefore, I don’t deserve a BMW.</p><p id="a32c">I chose the career I’m in, and I’ve accepted the salary I’m paid. Why would I, therefore, believe that I deserve a car that’s been designed and built for people far richer than me?</p><p id="e067">Buying something outside of my price range means taking on debt. If I’m forced to re-pay hundreds of dollars each month plus interest, it’d better be for a really good reason.</p><p id="d312">Taking on student debt for college makes sense, because in theory it leads to a career that will pay thousands of times on that investment. Buying an investment property is similar if you’re smart about it.</p><p id="7cd8">Outside of an emergency, I can’t think of any other good and logical reasons to take on the nightmare and wastefulness that is debt.</p><p id="99c7">When I first moved to Auckland, I knew that I needed a car to get around, and because I anticipated the move, I had $8,000 saved for the occasion.</p><p id="c75c">Car salespeople would have advised me to use that$ 8,000 as a downpayment on a $40,000 car. Others would have told me to take on a loan that allowed$ 0 down and to use the $8,000 on myself.</p><p id="bfc8">But I knew that regardless of what I wanted, I deserved a car worth$ 8,000 because that’s how much money I had. Because of that, I bought a beautiful red Hyundai i30. Practical, cheap to insure, cheap to fix, cheap to run. Plus because I had bought it outright, I was able to easily sell it when I moved away from Auckland in less than a year. I even sold it for the same amount I bought it for, so I lost no money from the purchase and gained all the advantage.</p><p id="004f">When I was younger, I needed a car and only had $2,000, so I bought a rundown$ 2,000 Toyota Corolla. That car was even cheaper to fix, but it wasn’t fancy. I wasn’t able to pretend to be a big shot, or even take it on long road-trips. The one time I did go on a road trip, I hired a car for the week, which was a lot cheaper than maintaining a loan for several years.</p><p id="f239">After running the car for three years I ran it into the ground and sold it for scrap metal, but it saved me a lot of money throughout its life, and I got a lot of great memories out of it.</p><p id="43d8">A car loan is an enormous and unnecessary debt that adds pressure to people and families who don’t need any extra pressure. Chances are, there’s an affordable car out there that fits into your price range and would fill your need as well as a BMW would.</p><p id="7eac">There are some <i>“financial experts”</i> that say important rich people wouldn’t be where they were if they didn’t<i> “look the part”</i> before they’d <i>made it</i>. But rich and successful businessman Kevin O’Leary disagrees with that way of thinking. In fact, according to O’Leary, we shouldn’

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t even own cars to begin with. O’Leary told CNBC;</p><blockquote id="f44e"><p>“You’re thinking about buying a car. Let me give you a new idea: Don’t. Cars cost a fortune in maintenance and insurance and just the amortization, which means as they go down in value, you’re losing money. Let’s say I pay $25,000 for it. Two years later, it might be worth only 12\dots I use my phone to call Uber or Lyft and they take me around the city. I save a fortune. I hate cars.”</p></blockquote><figure id="7be9"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/1*UfB6QEoPJUklTDm8wdyc_w.jpeg"><figcaption>Photo by <a href="https://unsplash.com/@rodancan?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Rodan Can</a> on <a href="https://unsplash.com/s/photos/bmw?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Unsplash</a></figcaption></figure><h2 id="0590">So a BMW is Off the Cards Forever?</h2><p id="6227">There is a time in your life when it’s perfectly ok to buy a BMW, and that time is when you’re able to buy it outright. It shouldn’t use up your savings, and running it shouldn’t cost more than a small amount of your monthly income.</p><p id="eafc">The reason debt is so terrible is because life changes. Just because you can afford to pay on the debt now, it doesn’t mean you’ll be able to a year from now. What if you lost your job? Or suffered an injury? These are the awful thoughts we don’t want to think about, but are realities in life.</p><p id="e3b0">The more debt we take on, the worse our lives will be during unexpected hardships we never thought to anticipate.</p><p id="922c">I believe that before you buy a car, you should run the “<b>annual re-purchase</b>” test on it. Ask yourself, based on how much the car is costing you to buy, could you afford to re-purchase it every year for the rest of its life?</p><p id="4060">I’m not saying you’ll have to; I’m saying you should overestimate the amount it’ll cost to run, fix, maintain, and insure it. More expensive cars cost more to insure, and their parts come at a steeper cost. If you’re about to pay$ 40,000 for a BMW, could you also theoretically buy it again next year? And the year after?</p><p id="fafc">These are the tough questions that people don’t ask themselves, and that’s the reason credit lenders make so much money. Be smarter than the average person, buy your car outright or don’t own a car at all. Keep yourself out of the debt system and secure a better and happier future for yourself and your family.</p><div id="886b" class="link-block"> <a href="https://readmedium.com/air-new-zealand-shares-are-plummeting-9e1298d6f94b"> <div> <div> <h2>Air New Zealand Shares are Plummeting</h2> <div><h3>We’re all waiting for the captain to tell us we’re going to be alright</h3></div> <div><p>medium.com</p></div> </div> <div> <div style="background-image: url(https://miro.readmedium.com/v2/resize:fit:320/1*G0Xi19lBtWPs5pIMxhgZTg.jpeg)"></div> </div> </div> </a> </div><div id="172c" class="link-block"> <a href="https://readmedium.com/the-tokyo-2020-olympic-games-may-be-cancelled-ab12a8df489a"> <div> <div> <h2>The Tokyo 2020 Olympic Games May Be Cancelled</h2> <div><h3>One more twist of the Coronavirus knife</h3></div> <div><p>medium.com</p></div> </div> <div> <div style="background-image: url(https://miro.readmedium.com/v2/resize:fit:320/1*0bCn71pex8IXCeZa2IUnJQ.jpeg)"></div> </div> </div> </a> </div></article></body>

Why a Car Loan is the Worst Decision You’ll Ever Make

And why there’s always an alternative

Except in extreme circumstances, I can never recommend that anyone ever buys a car with a loan. Nothing can make me lose my cool faster than someone trying to justify the logical reasons behind the loan that allowed them to buy their dream car.

In saying that, I understand that because of wealth and societal problems, there is a section of society that must borrow money to buy a car and that having a car is crucial for their employment. Although this is a political thing to say, especially in the current climate, I believe that we should have government or corporate infrastructure in place that takes care of people in these situations. Perhaps non-profits that provide micro-loans to eligible people in need.

But people who are borrowing out of desperation built on societal flaws are the minority. The majority of people who borrow money to buy a car are everyday people who could have just as easily purchased a car within their budget rather than the car they most wanted.

Your Favourite Thing

Louis C.K once said in his standup act that people are only interested in having their “favourite thing” and aren’t at all interested in compromise.

“Most people don’t give a sh*t what happens as long as they get to do their favourite thing. People don’t even want to back off from their favourite thing; they won’t even do their second favourite thing.”

C.K goes on to give an example of a driver who has four lanes separating him from the exit he wants to take on the freeway. Even though taking that exit will severely inconvenience everyone in the other four lanes and may even put them in danger, the man will cross all four lanes anyway to make that exit.

The man didn’t want to take a later exit that would allow him more time to cross lanes because making his trip as short as possible was his favourite thing.

I saw a CNBC Make It video on YouTube this morning, one of the Millennial Money videos. In this video, the 24-year-old woman is talking about how more women should be giving investment advice on YouTube because there’s a disproportionate amount of men giving investment advice, and women giving budgeting advice.

She then went on to talk about her own investment YouTube channel and the amazing choices she’s made in her life up until this point.

She then ruined it by talking about the BMW she borrowed tens of thousands of dollars to buy as a reward for herself for graduating college debt-free.

She took an amazing story of working through the scholarship system and securing a full ride through college, then threw it all away on a BMW. She’s now waiting until the car is paid off so that she can start thinking about a mortgage.

I was so depressed I quit YouTube and haven’t reopened it all day. I am depressed by her life story.

Unfortunately, her story isn’t unique, because so many people fall into the trap of rewarding themselves with things they can’t afford. For some reason, people have a certain feeling of entitlement that allows them to think they deserve things they simply don’t.

My World View

Here’s my world view. I can’t afford a BMW because I can’t buy it outright; therefore, I don’t deserve a BMW.

I chose the career I’m in, and I’ve accepted the salary I’m paid. Why would I, therefore, believe that I deserve a car that’s been designed and built for people far richer than me?

Buying something outside of my price range means taking on debt. If I’m forced to re-pay hundreds of dollars each month plus interest, it’d better be for a really good reason.

Taking on student debt for college makes sense, because in theory it leads to a career that will pay thousands of times on that investment. Buying an investment property is similar if you’re smart about it.

Outside of an emergency, I can’t think of any other good and logical reasons to take on the nightmare and wastefulness that is debt.

When I first moved to Auckland, I knew that I needed a car to get around, and because I anticipated the move, I had $8,000 saved for the occasion.

Car salespeople would have advised me to use that $8,000 as a downpayment on a $40,000 car. Others would have told me to take on a loan that allowed $0 down and to use the $8,000 on myself.

But I knew that regardless of what I wanted, I deserved a car worth $8,000 because that’s how much money I had. Because of that, I bought a beautiful red Hyundai i30. Practical, cheap to insure, cheap to fix, cheap to run. Plus because I had bought it outright, I was able to easily sell it when I moved away from Auckland in less than a year. I even sold it for the same amount I bought it for, so I lost no money from the purchase and gained all the advantage.

When I was younger, I needed a car and only had $2,000, so I bought a rundown $2,000 Toyota Corolla. That car was even cheaper to fix, but it wasn’t fancy. I wasn’t able to pretend to be a big shot, or even take it on long road-trips. The one time I did go on a road trip, I hired a car for the week, which was a lot cheaper than maintaining a loan for several years.

After running the car for three years I ran it into the ground and sold it for scrap metal, but it saved me a lot of money throughout its life, and I got a lot of great memories out of it.

A car loan is an enormous and unnecessary debt that adds pressure to people and families who don’t need any extra pressure. Chances are, there’s an affordable car out there that fits into your price range and would fill your need as well as a BMW would.

There are some “financial experts” that say important rich people wouldn’t be where they were if they didn’t “look the part” before they’d made it. But rich and successful businessman Kevin O’Leary disagrees with that way of thinking. In fact, according to O’Leary, we shouldn’t even own cars to begin with. O’Leary told CNBC;

“You’re thinking about buying a car. Let me give you a new idea: Don’t. Cars cost a fortune in maintenance and insurance and just the amortization, which means as they go down in value, you’re losing money. Let’s say I pay $25,000 for it. Two years later, it might be worth only 12… I use my phone to call Uber or Lyft and they take me around the city. I save a fortune. I hate cars.”

So a BMW is Off the Cards Forever?

There is a time in your life when it’s perfectly ok to buy a BMW, and that time is when you’re able to buy it outright. It shouldn’t use up your savings, and running it shouldn’t cost more than a small amount of your monthly income.

The reason debt is so terrible is because life changes. Just because you can afford to pay on the debt now, it doesn’t mean you’ll be able to a year from now. What if you lost your job? Or suffered an injury? These are the awful thoughts we don’t want to think about, but are realities in life.

The more debt we take on, the worse our lives will be during unexpected hardships we never thought to anticipate.

I believe that before you buy a car, you should run the “annual re-purchase” test on it. Ask yourself, based on how much the car is costing you to buy, could you afford to re-purchase it every year for the rest of its life?

I’m not saying you’ll have to; I’m saying you should overestimate the amount it’ll cost to run, fix, maintain, and insure it. More expensive cars cost more to insure, and their parts come at a steeper cost. If you’re about to pay $40,000 for a BMW, could you also theoretically buy it again next year? And the year after?

These are the tough questions that people don’t ask themselves, and that’s the reason credit lenders make so much money. Be smarter than the average person, buy your car outright or don’t own a car at all. Keep yourself out of the debt system and secure a better and happier future for yourself and your family.