The Better Budgeting Podcast
The Better Budgeting Podcast is your go-to resource for mastering your finances without the stress. Hosted by Danielle Reese, this podcast breaks down budgeting, saving, and smart spending into simple, actionable steps. Whether you’re tackling debt, building wealth, or just looking to make your money work smarter, we’ve got expert insights, real-life success stories, and practical tips to help you take control of your financial future. Tune in and start making your budget work for you—without sacrificing the things you love!
The Better Budgeting Podcast
Your Guide to Smart Car Buying With Financial Coach Connor Tyson
Remember your first car? Join me, Danielle Reese, on a journey down memory lane with personal finance coach Connor Tyson as we share those unforgettable first car stories and the financial lessons learned along the way. Discover how Connor's early experiences with his trusty Chevy Nova shaped his approach to financial responsibility and car ownership. Our chat is full of candid tales and practical tips designed to make the car-buying process a little less daunting.
Looking for a reliable ride without breaking the bank? We're breaking down the essentials of car ownership, from understanding the true costs to the benefits of buying used versus the potential pitfalls of leasing. Connor and I shine a spotlight on the perks of certified pre-owned vehicles. We also delve into the world of insurance, sharing insights that can save you money and frustration. Whether you're buying your first car or your fifth, our conversation is packed with insights to help you make informed, financially sound decisions.
Ready to negotiate like a pro? We tackle the art of the deal, discussing the best times to buy, smart financing strategies, and how avoiding those lengthy car loans can help build your wealth. Plus, learn why co-signing loans might not be the best idea and how gap insurance can be your financial safety net. This episode promises to transform the way you think about car buying and financial growth.
Connor Tyson
Progress Solutions
www.progressfc.com
Danielle is a money coach helping women and couples who have been trying to figure out their finances FINALLY create a clear plan so they don’t have to worry about waiting to refill their bank account the next payday.
She is the founder of The Financial Freedom Society on Facebook and her signature money coaching program, The Better Budgeting Playbook. You can sign up for her newsletter by clicking here.
Take the first step towards financial freedom and sign up for a complimentary assessment call with me, Danielle Reese.
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Hello and welcome to the Better Budgeting Podcast. I'm your host, Danielle Reese. I'm a money coach and the founder of the Better Budgeting Playbook, and this is my one-on-one coaching program for women and couples who have been trying to figure out their finances, finally create a clear plan so they don't have to worry about waiting on payday anymore. I became a money coach in 2020 after paying off over $60,000 in debt, rekindling my marriage, becoming financially free and wanting others to experience the same. If you'd like to work with me, you can check out the link in the show notes there. Also, we have the Financial Freedom Society on Facebook. It's a free Facebook community focusing on debt payoff, saving strategies, budgeting and money mindset. You can find the link to that community in the show notes as well. Connor Tyson, thanks so much for joining us at the Better Budgeting Podcast. I appreciate you coming back. I'm really excited to talk about the topic that we have discussed. It is a good one. So introduce yourself for people that haven't listened to your previous podcasts with me, so people know who you are.
Speaker 2:Yep, my name's Connor Tyson. I'm a personal finance coach, father of two, love the outdoors and love what I do. I'm happy to be on here today.
Speaker 1:What do you love about the outdoors? Tell me about this.
Speaker 2:So the outdoors, it's my little sanctuary of peace. It slows me down, it helps me refocus on what really matters, sometimes because my life gets hectic. I grew up in the outdoors and I love hiking and hunting and fishing and just exploring nature.
Speaker 1:That is complete opposite of me, like I do not want to be outside. Unless I am by the pool deck, there's no reason for me to be outside.
Speaker 2:Yep.
Speaker 1:All right, today we're going to talk about buying a car and, for the listeners, connor and I we physically met a few weeks ago at IFCC International Financial Coaching Conference. You and I have known each other for almost two years now, which is great In the flesh. I got to see you and that was awesome and you were telling me about how you recently bought a car and you were walking me through this process and I'm like this is something I have no idea about. I am not comfortable. I hate buying cars. Probably been swindled a number of times with buying cars. It's just not my strong suit. So I figured hey, like you got to come on the podcast, please, and tell my listeners how do we responsibly buy cars. So tell me, where did you get this knowledge of buying a car?
Speaker 2:A lot of trial and error. I looked at the numbers because I'm a numbers guy and I was like you know what? I looked around and I was like this is a big, it's a big industry. They're making money. They're not doing anything out of the generosity of their heart here. What actually would make me really think about it is when I got married. Then there was two cars and I looked at how much money was going out in our monthly budget on just automobiles. It made me realize like okay, there's one path you can go by and you have nothing to show for it. You have a lot of restrictions.
Speaker 2:The other way is you own it, you don't have to turn it in, you can customize it, you can do whatever you want to do with it, and it still kind of retains some value. And then I started going deeper and deeper into it and I realized okay, this is how I'm going to operate with. I'm going to try to beat the game.
Speaker 1:Awesome. Tell me about your first car. What did you have as your?
Speaker 2:first car and what age? Yes, everybody, yeah, so we were talking about this before. My first car was a Chevy Nova. It was a 1980, I don't know what year it was. It was a complete beater. I was 16 years old. This was like the first, you know, gateway to freedom. I remember the passenger side window didn't work, you know, I had my CD Walkman like plugged in and like, yeah, we just tooled around that thing, you know, doing donuts and being stupid 16 year olds and driving to school and think I was cool.
Speaker 1:I had that car for about almost two years my very first car was a 1999 chevy lumina did you have a nickname for it.
Speaker 1:I did name name her Betsy, yeah, cause she, she was a wide load. My mind was the nuclear Nova. It was money green. It was a deep green that reminded me of money and I loved it. My parents gave it to me for my my 16th birthday and it actually was my grandma's car. They bought it from my grandma in Georgia and they drove it up here to Pennsylvania and gave it to me for my 16th birthday. I had that thing for four years.
Speaker 1:When I got a full-time job, I was about 20 because I left school. I left college. I hated college to be honest, that's a whole other conversation but I left college and I decided to get into the workforce. Once I got a full-time job, I'm like I can afford a car payment, yay, and I ended up getting a little tiny Kia, little black car and I loved that little black car. That payment was $189 a month and it was probably, honestly, a whole week of income at that time. But I loved it and I think it's funny because you mentioned that your windows didn't roll down in one side.
Speaker 2:Yeah, once the passenger side window did not roll down, it rolled it up and then you couldn't roll it down. People every once in a while would get in, naturally, and roll down the window and I'm like, no, I'd have to roll it back up, Chimmy it up. Yeah, it was like yeah, chimmy it back up. And it was like a procedure. It just got annoying, was like a procedure, just got annoying. Finally, I duct taped it like on the inside so people couldn't pull it down.
Speaker 1:My gosh, yeah, my, my uh, chevy lumina, I had uh locked myself out of my car and I had a boyfriend at the time where he tried to jimmy the lock and he ended up snapping something in the lock. So for two years I had to unlock my car from the passenger side, walk around and then get into the car for two years. So when I went and I got my new car, my Kia Rio, I did that for the first week I would go to the passenger side, unlock it and come over to the driver's side.
Speaker 2:It was a habit, it was a terrible habit, all right.
Speaker 1:So let's throw out some numbers first and have people kind of realize why we're talking about this. I mean, you gave me some really big numbers, so tell me the average used car payment right now in the United States.
Speaker 2:All right, so you guys can Google this. Anybody listening. The average used car payment in the United States right now is $525 a month. Wow, yeah, it seems like a small number, but if you think about it, let's just say you're driving career 16, you might not buy a new car, but really, let's say 20 years old until you stop driving, which is probably I don't know, the family takes you off the road around 80. That's like 60 years and the average car loan, let's just say over that period of time, is 6%. We did the math. I think it's close to three.
Speaker 1:Two point what is it? It's $3.7 million 3.7?
Speaker 2:Yeah, that's insane. Yeah, so that's why we're talking about this. Instead of paying that, you paid yourself that you'd be more than financially free.
Speaker 1:So if you're wondering if you can become a millionaire, yes, just don't have car payments.
Speaker 2:Yes, exactly.
Speaker 1:And then the average new car. Here you have $734 a month for a 2024 car.
Speaker 2:Correct 734. If you did the math on that, that comes out to. What is that?
Speaker 2:I have $5.1 million $5.1 million, yeah, so that's why we're talking about this, right? So having a car and everything else we're going into the holiday season, it's part of our culture, right? It's like American muscle, the Camaro, miami Vice, right, like the Corvette, it's part of our culture, right, and I think it's also not worldwide, but in America the car is part of our culture, right, and I think it's also not worldwide, but in America the car is part of our culture. The other thing is we were joking before about the holiday season, right? If you haven't seen it yet, the commercials are going to be coming out where the husband's in a, you know, santa suit or Santa hat, and it's night and it was like glistening lights in the driveway and everything's gray, a little snow on the ground, and she walks out and she sees a Mercedes Benz with an eight foot bow wrapped around it and she's like oh, this is so great.
Speaker 2:Thank you, and they brace and kiss and like everything's great. Yeah, if I did that, my wife would slap me so hard and be like If I did that, my wife would slap me so hard and be like what, what are you doing?
Speaker 1:You just bought like a $72,000 car, thinking that you were going to impress me or something like that's insane, yeah. And we've come to that culture of it's okay to surprise people and love them with these gifts and then it becomes extravagant gifts that could be way out of our budget. So talk to me about budget.
Speaker 2:Yeah. So the first step to this whole thing is know your numbers right. So I hate the B word. Let's get a money plan right, like where is our money going? What are our needs, our wants, what's our cash flow right? The flow of money comes in and goes out. When do we get paid? What could we afford? There's rules of thumb. This is just guidance of what should be around right, 15% of your take-home pay. So if you were making $42,000 a year, 15% of that's $525 a month. That's the max. If you buy the car outright, you should probably look to be around 30% of your annual income.
Speaker 1:It doesn't seem like tire.
Speaker 2:But we just did the math before where $525 a month, every single month, you're driving around a $4 million car. It's crazy.
Speaker 1:Yeah, and I say that that's not too bad, because that's what people will say oh, that's not too bad, yeah, Until it comes to be $3.7 million.
Speaker 2:Yeah, and that's just the payment.
Speaker 1:That's not even talking about the cost of the ownership, yeah, so tell me a little bit more about that.
Speaker 2:You want to look at maintenance, right. Do some research on car reviews, right. There's certain car brands I will not name any here that are notorious for problems. There's others that are tested over the period of time. You know them, I, I know them. They're usually japanese cars that they last there's no major problems. Windshield wipers and oil and tires. That's basically the maintenance cost of those cars, where other cars it's like transmission, drivetrain, ball bearings, computer chips and like all this other crazy stuff. That's all goes into it. You also want to look at insurance, fuel, fuel costs. These are all added onto it because you're going to own a car for, hopefully, a long period of time.
Speaker 1:And I'll tell you when I had my Kia Rio and I upgraded to a Kia Sportage by the way, I have a bad history with buying cars. Up until recently, I have switched cars multiple because I had no knowledge about it. So I had got my first like big girl salary job and I said, oh, I need to have a nicer car now. And I went and I got a Kia Sportage. I never thought about insurance. I was like, oh well, I've got full coverage on the other one, so it's not going to be any more. I've got full coverage. No, that's not the case at all.
Speaker 2:The word sportage right there. The insurance company is like oh wow, she likes sportage. Okay.
Speaker 1:She's going crazy, ramping this thing up with railroad tracks and everything. I did that in the Chevy Lumina one time and launched it off a railroad track Definitely not in the sportage, though. So insurance people don't realize that insurance is based off of what's it actually going to cost to cover the car if it's damaged. So the more bells and whistles you have and the newer the car, the more expensive this insurance is going to be.
Speaker 2:Yep, absolutely. So. What's included excluded in the insurance, how long you're paying that, what's the terms of those insurance, and also the color of the car makes a big deal, and also your driving age. I found that out where I got off my parents' insurance and I was like reality hit. My dad was paying that bill for me until I was 20. So it was like the insurance rates were a lot higher.
Speaker 1:Tell me about new versus used cars.
Speaker 2:A used car, someone else already paid the depreciation off of it. So when you buy a new car and you literally drive it off the lot, you lose like almost 20 to 25% of the retained value.
Speaker 2:Like you turned around and said, oh sorry, next week my wife doesn't like the way the doors open up, I want to return it. The guy will not give you what you paid for it nowhere near it. A used car is broken in. Someone else paid a depreciation and you can drive that car as long as you want A new car. If you lease it. Right, there's a lot of restrictions. We'll talk about that a little bit. That's another option. But a new car also. I mean, I can tell you my story. I had a car in 2011. I drove that car for 13 years and at the end of it I had 146,999 miles.
Speaker 1:Wow, you drove that thing to the ground, basically.
Speaker 2:Yeah, I drove that thing to the ground because I realized the math behind it.
Speaker 1:Tell me about certified pre-owned, because this is something that kind of confuses me.
Speaker 2:Yeah, if you just go to a car dealership. They have certified pre-owned, meaning they go through a pretty extensive inspection. I think it's like 130 different points on the car. You know it's a good car. Right in new york, where I'm at, there's a thing called the lemon law. Many states may have it. There used to be used car dealerships where they would sell lemons, like they call them, lemons. It was a car that they knew that the car would last like maybe a week or so and then something would really bad happen to the overall car. Yeah, you try to return it. You couldn't. So you know when certified pre-owned, you're getting a good car. It's used. They check the facts on the car as a car accident, all those different things, and the car is bumper to bumper, pretty solid car.
Speaker 1:Got it. Let's talk about leasing for a second. I remember I was in college and there was a gentleman that was on a club that I was in and he was telling me every two years, I lease a new car. Every two, I want a new car every two years. And I, you know, back in college I was like that's so cool you know you get a new car every two years.
Speaker 2:Well, let's just think about leases for a second. I was a victim of leasing. At one point where it was restrictive there was they restricted how many miles I could drive a year and if I wanted more miles I had to pay for that. There was wear and tear on the car, so they look at the condition of the interior and exterior of the car, and I had to return the car within three years and I literally walked out with nothing. And then they gave me the nice option of would you like to buy it out, or we can put you in a new car, a brand new car, voila, and the payment went up and I was like, well, I can't really afford that. They're like well, you can just buy out the car that you have now. And I was like, okay, sure, did that. Right Now I own the car where I could have owned it the whole time.
Speaker 1:Right.
Speaker 2:Versus just renting the car for three years. So when you walk into a car dealership, the first two questions out of five that they're going to ask you is how much down and how much a month? What are you looking for in a payment? If you give them a number, they'll make that loan, that lease fit that payment. They'll stretch that out. I've heard car loans of like seven to eight years now, where you're renting a car for seven to eight years. It's crazy. The average is 36 months. But that is basically leasing. They make money off of the interest rate. They know that you're going to be returning that car to them and then they can do certified pre-owned, make it through an inspection and then sell it to somebody else.
Speaker 1:It's kind of like they're making their money double on that vehicle, First through leasing and second through certified pre-owned Yep. Is there any reason that someone it might be a good option to lease.
Speaker 2:Leasing is good in companies when you have a big fleet of cars and there's a lot of wear and tear and you're going to turn over that car a lot. Think like a car livery service. Right, you drive people to and from the airport in the Lincoln town car. Right, you want to have a nice car every two to three years for the customers and so on and so forth right, Because you're putting a lot of miles on those things and you can negotiate leases.
Speaker 1:Yeah, that makes sense. So talk to me about doing your research. If you decided, okay, I'm going to buy used or I'm buying new, what research should you go and do before you go?
Speaker 2:and buy a car. Your budget number one right. And then two, you want to know like how much of an automobile can I get pre-approved for based upon my income? Car dealerships do their own financing another way in which they make money. You can get your own financing. You can go to your local credit union, your local bank, see what those rates are and do some research. And then also there's tons of websites out there Kelley, blue Book, edmunds, truecarcom. Do the research of what the numbers are and what the fair market value of the car that you want to buy is. So you know what you're going into eyes wide open. He with the most information has the advantage in negotiating also.
Speaker 1:Very true. I remember when I went to buy my Sportage I did get a check ready loan. So I went to my bank I said, hey, I'm looking to buy a new car. You know what can I get approved for? What they did is they gave me a blank check up to a certain amount and they said go buy a car. Great. And I went to the dealership and I went through all the process and I actually had them pull my credit and go through financing through them because you know, sometimes they have better deals than where you have at the bank. We'd get through the whole thing and I said you know what? I don't want that here's a check, wrote it and like when I felt like a baller Connor.
Speaker 2:Yeah, boss, yeah, exactly. So the same thing is with the. That's been my experience, where the other questions they ask you in those first five questions and decides how much down, how much a month is are you looking to purchase or finance this vehicle? They want to know where you're coming from. Do you have the money or are we going to make some serious money off of financing this person? So those are the top questions they ask when you walk in. So yeah, financing your own car, if it's available to you, is definitely the way to go in most cases.
Speaker 1:Connor, let's talk about co-signing alone.
Speaker 2:Tell us about this, okay so co-signing is code for you can't afford this. We don't have the confidence in you paying the payments. We're going to need someone else to sign for it, to take responsibility of you. Do not do it. I've heard nightmare stories of boyfriends, girlfriends, cousins just like nope, they just don't pay. And then all of a sudden there's like a notice hey, how are you? $525 is due, otherwise we have to. It's like what? Co-signing alone not good.
Speaker 1:And if you need a co-signer, that should be a red flag for you.
Speaker 2:Big red flag. You need a financial coach Right. It's a symptom of a bigger disease, a bigger problem going on and they want to sell it to you, but they're not taking that liability based upon your financial responsibility on paper, no way.
Speaker 1:Right, absolutely, I agree, when's a good time to buy a car.
Speaker 2:Good question. So at the end of the month, the end of the quarter or the end of the year? My experience with the old car that I had was October, the end of the month, the end of that model year, so it was a 2011. I bought it at the end of 2012. So they wanted to get that old quote unquote car off the lot and get the new inventory on. So there was incentive for them to clear out their inventory because a car sitting in a parking lot for a car dealership is not making them money.
Speaker 1:Right, and then also, I imagine, black Friday.
Speaker 2:Fourth of July sales a lot of incentives for purchasing.
Speaker 1:So let's go back to financing. If I wanted to finance a car, what are the terms that I should really stick to?
Speaker 2:There's time value of money right. My rule of thumb is 36 months, okay 36 months 36 months right, 36 months.
Speaker 2:I want to be able to have at least 75% of this car, if not all of it, paid off, because if I'm taking a loan out, it's debt and debt slows down the process of wealth building. If the majority of my income is going out to outside sources ie, ford Motor Company, honda, whoever and it's not going in my bank account, it's going in their bank account it slows down the process. So I just treat it like any other debt and I want to get it out of my life as fast as possible. That's just a rule of thumb. That 2011 car that I had it took me a little under five years to have it fully, fully, paid off.
Speaker 1:You know the average of a car loan right now. Let's say, is it 72 months, maybe 86 months, I can't remember.
Speaker 2:Yeah, it's probably about 60 to 72 months yeah.
Speaker 1:So if you do, because your rates are, so high.
Speaker 2:That's why.
Speaker 1:Yeah, and if you do a 72 months to get that lower payment, you're paying a ton more in interest over that time. Yeah, it was so much more. But imagine if you cut that time in half. You did 36 months of paying off the car and then 36 months of still making that payment, but into your investment account, savings account, whatever you wanted to do, oh my gosh, you'd have money for the next car.
Speaker 2:That's what I did. I was doing the math and I was paying $525 a month and after the five years it was zero. So that car was $30,000. I had $2,000 down and I had to finance $28,000. Five-year loan $528 is what it was was basically paid down by zero. But then what I did, because I proved to myself I could afford that car payment. So what I did was I continued to pay myself now the money and I invested it in an index fund for the next five to six years and I was getting north of 9% because that's how the stock market was at that time. Over that period of time, 72 months at $528 a month I had 50,200 bucks To go buy another car and on top of it, you know what I had the infinity. So I had that as a trade-in that had value of $2,000. So I turned in the car, had $2,000 off the sticker price of the new car, plus I had cash.
Speaker 2:The gentleman that was selling me the car must have asked me about financing 10 times and I said we're not there yet. I said I want to understand the car price right, and I was driving the conversation. He was like well, how much down, how much a month. I didn't let him know. I had a trade in either. I wanted to know how much. How much is the car? And I did my research. I knew the price of the car and then I did some more research. I wanted to know what they paid for the car. When you look at the sticker price, you ever hear that term, sticker price. It's usually on the window of the cars. There's the invoice of what they bought it for and then there's MSRP, which is manufacturer suggested retail price. You do not need to pay that. You can negotiate that price down. I looked at the invoice, the number they paid for the car, and then they had delivery. They get these cars delivered. The car dealership pays for that. It's not that much. It's maybe a thousand bucks, maybe $1,500 or something like that.
Speaker 2:So I knew they had some of that and that was my number and I wanted to pay less than MSRP and I had a number in my head. I knew how much money I had and I wanted to get the best deal. There's a term called out the door, because when you buy a car there's taxes, there's a whole bunch of things they tack on and then the price changes. The other thing about negotiation the first one to give a number loses. They're going to say, well, we're thinking $40,000 for this car. Oh, I don't know if that's going to. Is there anything you can do on that number? I haven't given a number yet and they might hold fast and say, oh, 40. But well, I actually did my research and I know this car is getting sold basically one county over for 30, yeah, 38, somewhere else. Right, and just shut up and all of a sudden, magically, this is actually what happened.
Speaker 2:The guy took $500 off. Let me go talk to my manager, came back and said, listen, we know that your wife's a teacher and this, that the other thing, and blah, blah, blah. We have a, you know, $500. We'll sell it. It was 500 bucks. I said, okay, that's, that's a good starting point. And then I just kind of shut up and then I said listen. And then I walked out. You have to be willing to walk out. They already have your name, your number, your driver's license. They're going to contact you right Cause you're a lead. You manager call me. Let's just save the middle man on this whole deal.
Speaker 2:So the manager called me back and I said listen, I know how much you paid for the car plus the delivery. That's your. You have to make a little more money on it. I get it. And I said this is my number. And it was basically maybe $250 above what that guy paid for that car, no-transcript to come in with a cashier's check. And I said I need some days to raise the money because, through with the car price, at what point did you bring the trade-in in? No-transcript, going to have to send it to auction. How is like $1,800, right, and I was like two grand. You got yourself a deal. I said, okay, done, that was it. I was like okay, so I had $2,000 off of the negotiated price that I had. This is awesome. It was less money than I really thought it was at the end of the day.
Speaker 1:So the takeaway is do your research, go ahead and go there and let them know you know what do they want for the car and having them telling you what it is, versus you going in and saying here's my budget, what can I get, and then having the conversation of let me think about it, I'll come back and slowing down yes, Slow down. This is a huge investment for a lot of people, people that haven't even bought houses. This is probably the most money you are.
Speaker 1:It's the second biggest purchase, probably of their life, yeah right, right, slow down a little bit and then, when you go back negotiating that price, we're not talking about financing until we actually need it. If that's what you need to do, we're not talking about trade-ins, we're talking about just the price of the car, correct? Then we can talk about financing if we need it, and then we're going to talk about putting a trade in.
Speaker 2:Yeah At the end. And then, oh, they're going to get upset. They're going to be like, well, we didn't know about that and it's that. They're like, okay, well, this is. If you want me to buy the car, what am I going to do with this old car? I don't need it, right? Or would you be willing to take it? And you know that they can sell it at auction? The other thing, too tactics that they use, kind of be wary of it. They want you to test drive the car because now they're going to get into the emotion side. They're going to be like you look really good behind that wheel.
Speaker 1:I've heard that before, yeah.
Speaker 2:Wow, you're like oh, this, this car, is you Right? And how does that feel? Like, how's that smell? You like that smell. Like, oh, how's that smell? You like that smell? Right, they're trying to get you to get emotionally attached. If it's out of your numbers, they're gonna try to press those emotion button right. Like don't you think your wife she's got kids? She doesn't. She want to feel good about driving and dropping the kids off at school and going doing what she's got to do, and trying to make you feel emotional about not being able to provide and it makes you less of a person because you don't have a new car for your family, whatever it is. It's crazy, but that's their tactics. It's okay, don't get emotionally involved. They're going to ask you these emotional questions and sometimes the answer is just like yeah, yeah, it's okay. Meanwhile you might be jumping up and down inside, but you can't show that, right?
Speaker 1:Yeah, absolutely Talk about added on cost.
Speaker 2:Okay, okay. So this is everybody has a nightmare experience with this, right. So you buy the car, right, and they're going to deliver it to you. You're going to go and it's delivery day and they cleaned it up and they're like, oh yeah, before you have to go see our finance manager in the back, we're going to, you know, just work up some numbers and you sign some things. Okay. So you sit down and they have this like well, listen, before you buy this big investment, we want to let you know, in your best interest, there's some things you can do to protect yourself. And there's like the wheel package, right, if anything happens to your hubs. There's drive train, bumper to bumper. There's warranties, for you can have this car warrantied for a hundred thousand miles or six years or whatever it is. By the time the person was done presenting this to me, it was close to like $3,600 more.
Speaker 1:No.
Speaker 2:And then he was like well, you kept pressing. I was like you know what? We'll just save ourselves some time. I'm not interested in any of this. I would like the car. So where do I have to sign and what boxes do I have to check? To kind of decline. And he was like, oh okay, I'm pretty blunt, but you can just stick to your guns and be like I'm really not interested in any packages or the warranty or any of that stuff.
Speaker 1:Because that's how they make their money also.
Speaker 2:So they make the money on the financing, they make the money on leasing, they make the money on the add-ons, right, and all their dealerships have these different things. And that's the finance job to make money for the dealership.
Speaker 1:Yeah, I remember when I bought my car that I have now. I've had this car for seven plus years at this point and I remember we were financing the car. We're sitting in that office and she has this hunk of metal on her desk and she asked me do you know what that is Now? Seven years ago, what was I 25, 26 years old? And she says do you know what that is Now? Seven years ago, what was I 25, 26 years old? And she says do you know what that is? I don't know. She said it's the battery that's in your car and if that goes out, that piece of metal right there is going to cost you $4,000. You want to ensure that.
Speaker 1:At that point I was actually on our financial freedom journey and I knew what I could afford. I knew what I needed. I did the research on the car as best as possible and I said honey, how long is the battery supposed to last? Oh, you know, anywhere between seven to 10 years. And I said this car will be paid off in seven to 10 years and if the battery dies out by then, it would probably be a time to get a new car anyway. No-transcript.
Speaker 2:Yeah, I actually turned it on them. They were like the drive training and all this other stuff. I'm pretty confident, I'm buying a pretty good car. I'm buying it. I've done the research. From you trying to sell it means that you're not confident in the product that you're selling me. Yeah, is that? Is that what's going on right now? And she's like no, no, no, we're very confident in the car. I said okay, good, so there's no need for warranty, we're good, right.
Speaker 1:And I love how you put that, because that's exactly what it is why?
Speaker 2:why are you trying to sell me a $? Yeah, but we're not through you, we're good.
Speaker 1:Thanks, I got my insurance. Let's talk a little bit about gap insurance for a second, because I truly believe if you're going to finance a car and you don't have the means to cover anything extra, I think gap's a great option. So, for listeners, if you don't know what gap insurance is, if you finance a car and let's say it's $50,000, you drive it off the lot, it's now worth $40,000. The insurance company if you total that car right outside the lot, they're going to give you $40,000 for that car. That's what it was worth at the time of the accident. You still owe that additional $10,000. Gap insurance is what's going to take care of that 10 grand if you don't have it. So essentially you're going to be making car payments for that additional 10 grand until it's paid off and full, and gap insurance is what's going to take care of that. But tell me your thoughts on gap.
Speaker 2:Yeah, it makes sense, right. If you can't afford it out of your pocket, it makes sense, probably right. But if you can't afford it out of your pocket, it makes sense, probably right. But if you can save the money in a sinking fund for the things that might happen with my car the car maintenance fund, let's call it you're probably better off doing that because, again, they're not selling things just because you're a good person, right? They're selling things that make money. So if they're selling gap insurance, they know what it costs, the odds of it actually happening and they charge a premium appropriate for them to make a profit off of it.
Speaker 1:Yeah, absolutely, and that's why I like it as a means of protection. But I can understand if you would just take that money and put it away anyway. What you were going to pay in gap, you might be all right.
Speaker 2:Yeah, I would think so. I mean, that's what insurance is. It pays for those things you can't afford to lose, yeah Right. So if you can't afford the difference in the value of the car and what you paid for over that period of time, the goal is to get the car paid off as fast as possible. So therefore, you have more cash flow to do the things you want to do when you want to do them.
Speaker 1:Yeah, so let's say that you are not confident in doing this process of going in and negotiating and everything. This is actually something new that I learned from you. Tell me about car services, car buying services.
Speaker 2:Yeah, yeah. So Costco has an auto program where they actually secure the best prices without all the haggling for you. True Car also has transparency pricing. You can actually pay brokers to do the negotiation where they play hardball. They get the rest numbers, they know the dealerships. They do all that work for you. You pay them a little fee for that. That might be peace of mind, Might be worth it. A friend of mine does that for all his trucks. He hates it. It's uncomfortable, he just he hates it, Right. So he's more than happy to pay the 600, 700 bucks to do that.
Speaker 1:Yeah, and if you think you know if it's six or $700 to save me four grand on the car.
Speaker 2:Yeah, I'll do that all day.
Speaker 1:So smart, so smart. That might be my next thing when I go to buy a car because I, like I said, I hate going to the dealership. I hate dealing with you slimy salespeople Now, not all of them are slimy in sales. I will say that they do need to make a living, but it is. What can you do for me? And I want to be serviced. I want you to have my best interests at heart, and if you can't do that, the relationship's not there. I'm not buying a car from you.
Speaker 2:I actually. I found a car salesman. That's really good. I'm going to give him a plug right here, if it's okay. His name is Honda Pete. Honda Pete is not a salesman. He literally guides people through the process and he's turned people away Like you can't afford this car. I'm sorry, I'm like what I'm like? He actually turned you away Like he knows what it is and he's like nah, this is not in your range. You're better off doing this Right. And that's very rare. When you find a person like that, you hold onto them because it's it's a big purchase and you don't know what. You don't know Right, and it's like the next step in your life and you need a car to get around. And they just take advantage of ignorance and that's that's. I want to stand against that. That's not right. Arm yourself with knowledge, process, clarity of what you're doing, and keep the emotions out of it and try to get yourself the best deals possible. And the other thing too no one cares what kind of car you're driving.
Speaker 2:When I'm in the kid pickup line to pick up my kids from basketball in school. I'm not looking around like oh wow, I wish I had that car, I could care less. And same thing for them. Don't do it for the wrong reasons. Do it for functionality. It's a car.
Speaker 1:When I got my car that I have now again I've had it for seven years I was actually driving 150 miles a day with my job. So I got the car because it was a hybrid and I paid very little for gas mileage right. It was like 50 to 60 miles a gallon. Great love it, and I've stuck with that thing. It's tiny and really small. My kids are starting to kind of outgrow it with their car seats, that they're in their booster seats. But listen, it's, it's staying for as long as it can.
Speaker 2:The funny thing about used cars is like in the beginning they're not that cool and then they become cool. My buddy bought a 1986 K10 Blazer. Right, I was like that is the coolest thing. Like an old Ford pickup truck, like they're old, but they're cool after a while, like they're not cool, they're the beater, and then all of a sudden they're like cool again. Right. So the the notion of whatever you you believe about used cars and you're embarrassed about or whatever it is, it's not. It doesn't say anything about you. Yeah, at all right, and it's like it's tough to, because it's part of our culture and the way we're programmed to think. Like your car is your identity. It's not at all.
Speaker 1:It's costing you a boatload of money yeah, to the tune of 5.1 million if you continually buy new cars.
Speaker 2:Yeah, if you just paid cash and then invested that payment for those periods of times, that's huge, that's a huge amount of money.
Speaker 1:Yeah, absolutely. Hey, connor, thank you so much for coming on this podcast and helping decipher this. I've learned a lot with this. Because this is not my strong point, I probably will use a broker service in the future now that I know about them. But thank you so much, I really appreciate it. And where can people find you if they?
Speaker 2:want to work with you. If they want to learn more, where can they find you? Yeah, so my website is progress. We want to make some progress, right? Progress FC, which is financial coaching, progressfccom and everything and everything on there. Everybody gets a 45 minute conversation. Let's just talk about where you're at, where you want to go, what's holding you back and everything's outlined there. That's the best way to get in contact with me. I'm on Instagram Connor the financial coach.
Speaker 1:Yeah, there's a thousand different ways to connect with people now.
Speaker 2:Yeah, I know right.
Speaker 1:Gotta go through the list and list them all. Well, hey, I'm gonna put it in the show notes as well. So if anybody wants to connect with you, I hope they do. You're an awesome coach and I really appreciate you coming on.
Speaker 2:Thank you so much, Daniel.