Hello, do you ever feel like you're doing all the right
things but your budget still feels tight?
What if the biggest drain on your money is sitting in your
driveway? The average car payment in the
United States is now over $700.00 a month and that doesn't
even include insurance, gas, maintenance, or the emotional
toll of car stress. So today we're going to be
talking about cars and if your car is the thing that's keeping
you broke. So I know this was something for
my family that was very challenging to move past.
And so I'm going to share a little bit about my story, but
also some tips for you to help understand if your car is the
thing that's keeping you where you are financially.
Welcome to the Debt Ripple podcast where we discuss the
insurance and outs of personal finance for families so you can
eliminate the burden of debt, create financial margins, and
learn a new way to interact with your money.
I'm your host, Jules the Budget Nerd, and I have been in your
shoes. My husband and I have paid off
over $107,000 in consumer debt until we finally threw in the
towel and decided it wasn't for us.
Throughout our journey, we learned another way to do life
without debt, and that's my hope for you.
You can learn more about our story and see full show notes on
my website, julesthebudgetnerd.com.
That's JEWLZ, the budget nerd.com.
Now let's dive into today's episode.
All right, before we dive in today, I just want to say an
extra special thank you and welcome to our alliance coaching
membership, our alliance coaching members who just joined
us recently. Because this topic is one that
comes up a lot in my my coaching practice.
But also I wanted to address it for our podcast community
because it is one part for our family that was quite a game
changer when we shifted our mindset about car ownership and
our our transportation to and from work.
So I'm going to, as we dive into this, I want to talk today about
why or if your car is the thing that's keeping you broke.
So one thing that we found for ourselves, I grew up, my parents
didn't have car payments. My grandparents didn't have car
payments. They always paid cash.
You know, I wrote a check for a car and even if it was a brand
new one, they always, they always paid cash for it was
never financed. So then when my husband and I,
it was right before we got married, he was actually working
at a car dealership. And so we thought, hey, we're
going to be getting a really good deal.
He had a car payment at the time, my car that was a car that
my parents had purchased for me when I was younger and I was
still driving that and we wanted to buy a car together.
So my husband was working at the car dealership at the time as
before we got married, but he was working there.
So we thought, hey, we're going to be getting, you know, the
friends and family discount. And we were just about to get
married over that. Hey, this will, we can do this,
right? And it was about the same price
he was paying for his car payment that he already had.
So we decided to go for it and we bought this.
It was it was, it was more on the luxury side for a car, you
know, leather seats and the, you know, the brand, that kind of
stuff. And we got into a spot where the
driver's side window broke not long after we purchased it.
And when we found out how much it was to replace it or to fix
it, we decided we would wait. And then like, you know,
headlight went out. And because of the make of the
car, there were some things that we weren't able to do ourselves.
And so we had to have a shop do it for us.
And so those bills added up very quickly, so to the point where
we were trying to make the car payment, pay for the insurance,
obviously the gas, you know, taxes, registration, that kind
of stuff. And we couldn't pay for all of
those things all at the same time because we had overextended
ourselves in our budget to the point where we just had to roll
the window up and let it go. And so we had a driver's side
window that didn't work. I would, well, let's see, it
worked for a couple of months after we first got it, But for
the the remainder of the time that we owned that one, even
when we sold that car, the driver's side window didn't work
because we couldn't afford to do that.
We had to make sure that the payment was paid and there was a
time when we couldn't do all of those things.
And I hear a tow truck come up the driveway and I think that's
the day that our car gets repossessed because we just
couldn't take all of the expenses all at one time.
So when we talked about the difference between we go to
maybe a dealership or something like that and we're going to
purchase a car, we think about the car payment, but we
sometimes can lose sight of what the actual costs are.
Like we know that the cars need to be insured.
We know we got to put gas in it. We know all those things.
But do we know the actual expenses for that particular car
and what it's going to look like for us?
And how is that going to change our family's financial
situation? So at the time, you know,
insurance for newer cars is more expensive.
Gas prices were very different back then, but still that's all
relative, right? And then we purchased a car that
we couldn't do some of the maintenance and the repairs on
ourselves. And then you've got your
registration, taxes and fees. And then there is the one thing
that we didn't take into account and that we didn't realize that
we were in a situation that was causing us some emotional
stress. And it was, it was an emotional
cost. So there was this stress
because, my gosh, we have this, we have this car that we're
trying to make payments on, and it looked really great from the
outside. We were the only ones that knew
that the driver's side window didn't work.
Yeah, of course, we didn't go through Dr. Thrus because we
couldn't get the window down. We'd have to open the door.
And so that was super embarrassing.
So that goes to that whole part of trying to keep up the
appearances that we had. It had it together.
And so that's one of those hitting costs I think that we
don't necessarily take into account when we're purchasing,
you know, big, we're making big purchases.
So sometimes this can happen with homes, but especially with
cars. Our culture really puts a lot of
value on the kind of car we have, maybe our address, that
kind of stuff. And so those things can really
distract and take away from the joy and the things in life that
bring us joy and rob us of the mental capacity to focus on
other things. And so today I want to encourage
you, whether you maybe you have, you're in the situation where
you're like, you know what, the bills for the car are adding up
way faster or maybe I'm in a lease or a situation where I
don't want to do this anymore. We're going to talk about a
little bit more about that in a minute.
But one of the things when I'm when I'm talking about the
distractions and that kind of stuff, it is an opportunity
cost. So if we're going to use the
example that the average, the average US family has a car
payment of $700.00, what else could we be doing with that
$700.00? So that's right there.
That's a huge chunk of an emergency fund.
Imagine how much debt you could pay off every single month if
you had an extra $700.00. Or maybe what kind of vacation
you could take every year with $700.00.
When we sign for a car payment, it isn't how much per month it
is. It is we do ask ourselves how
much per month, but there's a much bigger price tag that goes
into that that sometimes we can not take into account.
So for US one of the things was the negative equity.
So when we purchased that new car or that new to us car, it
was it was still a used car. But when we purchased that then
my husband's previous car had negative equity.
So we had to roll that into the new loan.
So if you add that on top of the purchase price of that car, then
maybe the interest was higher, that kind of stuff.
It just is a snowball in the opposite direction that we want
to go. So when I talk about a debt
snowball, we don't want it to be that kind of like it's just
building and building and a debt part.
We want to be reducing that and eliminating that debt.
So one of the things that our culture says is that car is like
a sign of success for us. And so I know that I myself,
when I first started out in real estate, I was, I was very aware
of what people thought about real estate agents and what kind
of car they drove, how successful they were, whether or
not they wanted to do business with me.
And so I had a Volvo station wagon and I was like, I'm not
able to get a new car. So you know what I did, I was
very young at the time, I was 22.
And so I got glasses and I wore my hair a certain way because I
wanted to look older so that people would take me seriously.
And so some of those things and some of those traps that I got
myself into was I was more worried about what people
thought of me then I needed to be.
And I allowed that to be a distraction in my life.
So just like when we bought that car, we thought, you know what,
this is a sign of success. It's the first thing that were
purchased. So, well, the second thing, we
bought a house together, but it was the second thing that we
were purchasing together that I was like, hey, everyone else is
doing this. And then we got into that
situation where we couldn't do, we couldn't make all of the
payments and maintain it and all of the things all at once.
And so that's when we decided once we got rid of that car that
we weren't going to go back to car payments because it's such a
huge expense. But like I said, the opportunity
cost there, the other things that we could be doing without
money are are very different from paying a bank to lend us
the money to have a car that isn't going to work anyway,
right? So what do we do instead?
So this is where we have to, we kind of, we kind of flip things
on its head, right? This is where the
countercultural jewels, the budget nerd, the debt rebel
comes in. Because I want to challenge the
way that you think about your car.
Right now, your car is just the mode of transportation that you
use to get your kids to school, to their activities.
The thing that you do to get your family to maybe, you know,
Rd. trips, that kind of stuff. You want it to be safe,
obviously, but you, it is the thing.
It's a tool that we use to create the memories with our
families. So now the things that I'm about
to share, this is not to bring any kind of shame because trust
me, I have I have been in your shoes.
And if you're thinking, you know what I, what she's saying makes
a little bit of sense. It sounds a little bit crazy,
but hear me out because I want to challenge you in the most
positive way to re evaluate some of the things that we think our
needs in our lives for. Maybe this is a short season and
maybe I'll explain more here in a second, but one of the things
that our family really looked at was do we absolutely need 2
cars? Now at the time, my husband
worked close to work and so and I didn't.
We could coordinate our schedules so that I could take
him to work and it wasn't going to be that much of an
inconvenience. But then also his employer
provided a bus pass. We live really close to the, you
know, bus system, so that was an option.
He could ride his bike. So there was a time where we
were down to 1 car because it fit our lifestyle and our
financial goals better. There was a time where we, like
I said, that car that we had, we got it down to the value that it
was actually the market value. So we owed more than the market
value. We finally got down to where we
could sell it and just got rid of it and then paid cash for a
used car from there. There was another time where as
we were actually gifted a truck, which was an amazing
opportunity. It was amazing gift and it
wasn't, it wasn't a brand new, it wasn't a brand new thing, but
it was something that was going to help us get through a season
so that when we had the opportunity to gift another
vehicle, we were able to do that for another family.
And so those things might might not be an option for you, but
it's just we want, I want you to, I want to challenge you to
think outside the box and think about really is your, your car
situation? Is it serving your family the
best right now? So like I said, you can you know
another opportunity or another way that you can eliminate some
car stress is AC about paying off your current car early.
Maybe you are you can shop for a different insurance that one's
and will help when you own a car that is so newer cars have
higher insurance rates because the cost to replace them is much
higher. So one of the reasons why our
family drives cars that aren't brand new, that are, that are
new to us, but that I have smaller, smaller value is
because the monthly insurance costs a lot less.
Usually the recalls have already they've already made their way
through and those are over and done with.
We know what we're getting. One thing when you're shopping
for a vehicle, that's a really great tip is if you find one
that you like is just Google or a get on ChatGPT and say, Hey,
what you know this year, make and model, what are the biggest
issues now? If you see stuff like, you know,
they have huge engine issues or electron electrical issues, that
kind of stuff, steer clear, right, because you know that the
expenses are going to be higher for repairs on those things.
Now all all new cars, whether they use gas or electric,
there's going to be maintenance. So you and you want to factor
those things into your budget, but all cars are going to need
some maintenance. You're going to get a flat tire
at some point. Those types of things happen and
that's what happened to us recently.
My car that I absolutely love, it meets all of our needs.
And that's one of our big jokes about it is because it really
does meet all of our needs. But it's getting older.
And I went to turn the air conditioning on the other day
and all of a sudden, like the this light pops on.
And so I pull over, get it towed to the shop and the and needs a
new and need a new battery, which we hadn't replaced the
battery since we got it and we've had it for a while.
And also the alternator went out.
And so those those types of things, we have money set aside
for that. So that didn't become a
stressful situation. I was with my daughter.
That part wasn't what, but I got to a safe spot and I could just
like if I was driving a brand new car and had an issue with
it, the exact same thing is going to happen.
However, this wasn't as stressful because we have money
set aside for these types of things because life happens, but
also and we didn't have the added stress of trying to make a
car payment and do all of these things while making the repairs
as well. That's where the next the next
thing is, is to have that sinking fund that you have is
just money set aside. Maybe it's in a separate
checking account or savings account for your repairs for
your car so that you don't have to swipe your credit card when
those things come. And so today I want, I want you
to hear me say that our cars, just like our credit scores do
not define us. But today I want to encourage
you to think about maybe driving an older car that's paid for is
going to give you a better quality of life than the stress
of that $700.00 every month bill.
Because the the time and the energy and the money that goes
into maintaining a car. All cars, like I said, need
maintenance, but all of the efforts that go into that kind
of thing could be redirected somewhere else if you didn't
have to worry about that $700.00 every single month.
And so if you are thinking, hey, you know what, maybe maybe my
car is the reason why I can't make the kind of financial
progress I want to make for myself and for my family.
And maybe it's not your car. Maybe it's some other little
expenses that are just really keeping you from that financial
freedom that that you deserve. This is my special invitation to
you to join the Alliance Coaching membership.
And this is where we do that kind of evaluation together.
We create a plan and help you to take action in real life.
So we get together a few times a month online and we work on our
budgets together, provide AQ and a session where it's your ask me
anything opportunity. And there's also step by step
plan to eliminate your debt 10 times faster because when you
have support and accountability, you're going to cross that
finish line much faster than if you did it on your own.
I would love it if you would join me inside the Alliance
coaching membership. You can join us at Jewels the
Budget nerd.com, that's JEWLZ, the Budget nerd.com/membership
and get your next paycheck working for you and not for your
car. So I hope that today's episode
was a challenging one, but a good one for you.
I would love to hear what you think.
You can send me a message on Instagram and you can also catch
me inside the Alliance Coaching membership.
All right, talk soon. Thank you for listening to the
Debt Rebel podcast. Now, if you want to take your
next step, check out my website, jewelsthebudgetnerd.com.
That's JEWLZ, the budget nerd.com.
I've created a bunch of resources just for you.
So hop on over, check it out and we can connect more there.
If you love today's episode, I would be honored if you would
hit that subscribe button and leave me a review.
And remember, every step towards financial independence is a
rebellion against debt. So stay strong, keep pushing
forward, and fight the good fight until next time.
Debt rebels stay resilient.