Traded in my dream truck for a 2023 Kia rio that I was able to put 35% down on. Took out a 24 month loan on the rest, and since bought new got 3.9% Kia financing and, comes with 100k Kia warranty. This peace of mind of a sound financial decision is WAY cooler than my truck ever was! Thanks guys for your wisdom.
The problem with this is that after 120 miles you'll spend a lot of money per year to maintain it and then the same next year and throughout the year you have to keep changing things. I have a Toyota Corolla which is 16 years old and it has no option really It is very basic and I spend around a £1,000 per year to fix it but then it gets the point which when I drive the car I don't feel confident about it. I hate to change my car and buy a used car but what can I do... 😮
@@behnamanisi1I have had an 04 Accord since it was a year old. It's needed less than $1000 in non preventive maintenance Part of it is luck and being able to do the work yourself
Living that corolla life. 200K miles and hoping to get 50K more. Saving for my next car using 20/3/8 as the guidelines. Great, reliable content - so glad to find your channel!
Camry with 177k here. Change the oil myself every 4-5k miles and top off all fluids. Hoping for another 130k with minor maintenance. My registration and insurance are such a breath of fresh air compared to my brand new Honda 2 years ago.
Have fun with just a newer Corolla cause that's all you'll be able to afford with this 20/3/8 rule (unless you be making well over 70k despite still driving an old beater)
@@StandAloneState if only it was that simple lol most cars will need significant repairs and parts replaced after that 200k mile milestone, if they haven't been having them done regularly already. My 2010 Ford Escape Hybrid was perfectly fine with basic maintenance up until the last few thousand miles. I'm at 216k and almost all at once everything that isn't included in standard maintenance started creaking, squeaking, and just straight up wearing out. I've been told the car I have can make it up to 300k, but I have never met a single person with any car made after 2005 that has anywhere near that much that didn't buy it second hand after a total maintenance overhaul.
Model 3 rules - vs the Civic and Corolla… 1) That tax credit - you quickly mentioned it - but a family, particularly with young kids or kids in college, might not have enough actual tax liability to use that Federal EV Tax credit. That Federal tax credit is not refundable. Same goes for folks thinking they can leverage the federal solar tax credit - you cannot use it unless you have enough actual tax liability. 2) While routine Tesla maintenance is cheap… watch out for non-warranty repairs! Stories abound about Tesla owners getting huge repair bills that are exceedingly rare on a Civic or Corolla. Example: the base Tesla does not have a drivetrain in the front of the car, leaving the front edge of the battery pack exposed to road damage. 3) The base Model 3 is Rear Wheel Drive. That might not work in the northern parts of the country. 4) EV range in really hot and in cold climates. Do the research - you might find that base Model 3 doesn’t have enough real world range for you. 5) EV charger network - while the Tesla charging network, unlike third party chargers, is reliable, research where you travel. Outside of California, Florida and the Northeast, particularly outside metro areas, the Tesla network is not nearly as filled out. 6) EV charging cost - research your electricity charging cost, even if you intend to charge only at home. Power rates vary dramatically by location. And for away from home charging, you might be surprised by how dramatically more expensive super chargers (fast chargers) are. The popular summer spot we frequent does not have any EV chargers conveniently located.
Don’t forget to include taxes and fees when you are looking at cars. Those usually add 10% to the sale price. So to spend $22,000 you would need to look at cars with a listed price of about $20,000.
What’s the point of using gross instead of net income for the 20/3/8 rule? It makes more sense to use net income as that is the amount being used to cash flow or purchase the car.
It would make cars MUCH less affordable that way, using the 8% part of 20/3/8, you'd need to be making SO much more than they mentioned if you use net to ever get any car not from a family member, basically
@@uzimakiuchiha that is the whole point of This rule. It’s to prevent the overspending of your monthly budget on a depreciation asset like a car. If they use gross that is making it seem like you can afford more care than you actually can as most people gross pay is significantly more than net pay.
5 years before you want to buy a car start putting enough away every month in a money market to equal what the car payment would be for it. In 5 years you'll have enough to pay cash, tax, title, license. Up until you buy the car it makes a great supplemental emergency fund.
When it comes to insurance it’s make a huge difference where you live. It could mean doubling the amount you would pay if you moved over to the next zip code it’s just crazy, even when you’ve never had a claim, your credit is off the chain your driving record is impeccable. That zip code could definitely double or reduce your premiums significantly.
I can attest to that since I worked in auto ins. One caller was really chill and he was excited to move to a new place. My eyes almost popped out of my head from the $60 it would to add to his monthly amt. We were both shocked since it was a relatively safe area. We still made the adjustment, but holy ish
Oh man! What great timing on this one. Thankfully, no one got hurt, but someone ran a stop sign, which led to a car wreck and my car getting totaled. I've been dragging my feet and slowly looking to replace my car. The interest rates are crazy right now. So glad to have a reliable source in the form of an up to date Money Guy Show for reference!!! Thanks Money Guys and team.
I’ve been feeling the itch to upgrade ever since my car was totaled (not even driving it). I make 100k gross, but it looks like I’ll be sticking with my 100k mile Honda fit until prices drop to the point the car I want fits into the 20/3/8 rule.
Love y’all for this video, I was beyond confused on what to do when buying a car. Most people say not to go past 20% of your monthly income but doing that doesn’t make sense bc of the cost of ownership on top of life expenses. Doing 20% for the car sounds like a nightmare and on top of that repairs and maintenance and other living expenses
I might clear $400k this year, but I'm keeping my $5k car as long as j can. The piece of mind is amazing. Liability only, park anywhere, scratches, dents mud, sand, toddlers... My coworkers think im crazy.
Unfortunately, I screwed up when getting my 2018 Honda civic back in 2022.. I leased it for 72 months for a 4.4% interest rate. With a 262.42 month payment. However, I decided at the end of 2022 to hammer the payment away. I added $100 a month and add extra at the end of the year to go straight into the car payment. Fortunately, I do love this car and plan on buying it out once the lease is done. I screwed up, but I am very happy to learn about this and from my mistake.
i LOVE my car. ive got an itch for a new car too, but my current one is awesome. i just hate paying for gas so my new car will be a hybrid. but yeah, my current car is a 2017.5 nissan rogue (they made a mid year update, lol) it gets like 28 mpg city and 33 mpg highway. I literally just got back from running errands with 35 mpg. but my next car will be the rav4 hybrid with 40 mpg city and highway. the only reason i got my current car was due to it being an SUV with sedan like fuel economy. highway mpgs in the 30s! sadly I just had to get the brand spanking new one. man, i was dumb. but I still love her. 80,000 ish miles right now and lots of memories.
I paid off my 2022 model 3 yesterday. Definitely way above 20/3/8 working at papa John's but the elteric is $125 a month vs if I were to use my mustang i would spend $750 a month on gas. Mine is a base with $2,000 worrh of upgrades the white seats and blue, sadly it was going for $48000 when I got mine but it saved me a ton on gas.
I’d recommend for used vehicles to check the data on reliability by year in addition to examining the overall reliability of the model. It’s very common for vehicles to be significantly more or less reliable one year or the next based on what happened in the manufacturing one year versus the next. And it’s not always the first year or two of a generation that is the most prone to problems like one might guess. The car might change where it’s manufactured mid-generation or have a gaff in the factory one year or have more issues due to something that was added as a mid generation upgrade. So any year can be the best year or worst year. And we’re fortune enough to be able to research much of that data for any used vehicle more than about 3 years old. It’s also a mistake to assume that all vehicles of some brands are reliable and all of other brands are unreliable. One should check the track record of the specific vehicle that they’re looking to purchase (make, model, year) and also consider the maintenance of the vehicle from the previous owner or owners. It can also be helpful to determine why a vehicle has a scratch or other blemish as well. A lot of those physical flaws aren’t a sign that the car wasn’t cared-for properly mechanically which is more important. It can also be a good move to buy a manual vehicle in the US which is unreliable as an automatic. Typically a bad automatic transmission in the U.S. can tarnish the resale value on all the versions. Even if the car is a manual. So that’s an edge for buyers who can drive a stick shift.
Thanks to you guys, I’ve decided my next car will be 20/3/8, but paid in cash. Using your formula to determine my budget limit.. at least until I reach financial abundance.
Hi money guys, I really like your content and would love your input and n a recent decision I made. A month ago I bought a new car, I didn’t follow your rules at all, but I think it was a good financial decision as it wasn’t an ordinary car purchase. Long story short, I really needed a new car. My 2003 Camry was dying; burning oil, 290k on the clock and just falling apart. I went with an EV, A BYD atto 3. Here in Australia there are plenty of incentives to buy them. The main one being that you can pay for them with your pretax income. With the Camry I was paying $140-$150 per week with all the expenses; fuel was $80-$90/week, then insurance, registration, maintenance, etc is another $3k or so each year. My new car costs me $201/week. BUT, that is all expenses covered. I charge it at work so that’s free, and the $201 covers ALL of the cars expenses. My weekly car expenses have gone up, but I get a full brand new car for that. I also never have to visit a gas station any more. Thoughts?
@@kckuc310 my current income is $96k and I’m saving about $500 a week (our house is fully paid off). We are currently looking for a bigger house to move into.
Guys on the electric cars look at the cost of replacing the generator or battery pack after warranty is out. Most of the time it is more than what the car is worth.
costs will continue to drop on batttery replacments if/when they need to be replaced. 10 yr old tesla batteries have been shown to still be in good shape.
@kreem82 they have also been known to fail and cost $24k to replace... That's a huge role of the dice. I would expect obscene depreciation on used electric cars out if warranty once people come to understand the risk unless cheap aftermarket batteries become available.
The battery pack generally needs a replacement after 10 years, which is around the time most people would be looking to replace their car, electric or not. A "financial mutant" would have been saving for either the battery replacement or the car replacement by then.
Currently driving my 2005 Odyssey that's currently at 190k miles. I do want to purchase the latest generation Sienna but to do it in the most efficient way based on my budget. Thank you my dudes for this video!
Wife and I own 3 cars. One is a 1998 Subaru Impreza I drive to work. Was my first car btw. Then she drives a 2010 Impreza. Then we have a pickup that’s a 2010 Chevy we use to pull our rv a few times a year.
Also just an advice for those that can. If there's a brand new car that you have your eyes on and if you're in a major metro city in the US (LA, New York City, Chicago, etc), check out the Auto show where you can go inside the interior of the car and test drive them without having to deal with the bs from salesman when you're just wanting to window shop.
Did the Tesla calculation take into account if you were investing the difference of the initial Tesla price vs Corolla. Or investing the difference in the payments you would have?
No but I did the math including paying extra interest the first year you wait for the tax credit. It haaaardly squeaks by at almost the same exact impact as 800/mo for a gas car
I love these guys. My 2011 Outback has 190k miles on it and I’m borderline being able pay for the replacement in cash. We’re trying to hold onto it for 1 more year. If we can’t pay for the next car fully in cash the goal will then be to pay it off prior to the 3 yr mark.
Problem is when you go to the mileage the data says you need to replace your battery in your Tesla. Hopefully you have a fund that covers a new civic/corolla for it.
Prius vehicles hybrids brakes last forever too lol Gasoline anything is fun to drive but it sucks to work on and maintain I have a e-bike so I haven’t been to the gas station in almost 10 yrs lol No fluid changes lol
I recently got a new job that where travel is required. They are giving me a $350 car stipend and would like to find something reliable with that. I’d love to some help working this into my finances.
I have a model 3 2022 I bought new and put 20% down, 6 year loan, payment $687 a month. 4.49% interest rate, I make around 80k a year and have a good amount of margin at age 22, I now own 3 properties (two as rentals) and advice on the car?
For the Tesla issue: the tax credit will be a point of sale rebate off the immediate price of the car starting 1/1/24; HOWEVER, that is assuming Tesla won’t bump it back up.
My opinion, most of the price increases were due to demand fuelled by cheap debt. Debt isn’t as cheap. So after tax wages need to rise in comparison to interest rates. OR, 10 year car loans will become a thing. $60k at 8.5% is 25% cheaper per month over 10 years compared to 7 years. Pay more of course, but most ppl driving demand are only looking at monthly payments unfortunately
I am still lucky when I had my accident and they totaled it based off the inflated value and I got extra due to my dad’s insurance and then got more for aftermarket upgrades. Whent to a Toyota dealership got a basically brand new car and hated it they would not exchange or take it back. So I went to enterprise and they paid me 29k when I bought the car for 27k three days ago. Then got a nicer car for less
$45k Car, $9k down! Leaves $36k to finance. Monthly payment of $36/3yr loan at 2.99% would be $1046. So if you make $75k, then your 8% is off your monthly correct? 75/12=6250 * 0.08 = $500 should be your max?
I’ve put 300k miles across all my vehicles I’ve owned the last 5 years… can’t really own a car for 8-10 years putting that many miles on them. They don’t make them reliable anymore. Bought a newer truck with 50k miles thinking I was doing myself a favor getting something reliable. 100k miles later and it’s cost me 28k in repairs over the last 100k miles….. I might have blown through 3 junkers for the other 200k miles but those 3 combined cost me less than the f150 service did.
@@TEXglisson yes early 2000s through probs 2015-2016 a lot of manufacturers were still making borderline reliable stuff. Post about 2015 all manufacturers are phasing out gas cars in favor of electric and not giving a crap or spending money engineering better gas engines. Instead that money is being spent on electric cars. Thus nothing new and gas is reliable even Toyota has fallen off the bandwagon.
You guys forgot to do a case study for a battery replacement of right now. and potentially in the future. Some people are getting cases where the battery would need to be replaced and it would cost 10k+ to replace to do if out of warranty. Assumption of batteries getting cheaper in the future is possible but as of right now there are some cases of people being charged half the cost of the vehicle.
@@mattmcfly2165 not hating what so ever. ive been looking at tesla for myself but i cant pull the trigger yet bc finances are not in line. But you have to look at that as a potential maintenance/repairs. If for whatever reason the battery or whatever component fails how much will it cost. You cannot take it to any shop to repair but tesla and they charge an arm and leg for some repairs/replacements.
Do yall recommend this same advice for UTVs? Or a diff set of advice/ rules? Im looking at doing a Mahindra Roxor (UTV). Has a 2yr UNLTD Mile warranty, jeep sized vehicle, w/ a 2.4L Turbo Diesel engine. Its governed at 55mph, but after the warranty that can be flash tuned/ reprogrammed and the truck could go 65+ MPH. The MPG is also 30+ due to the diesel TDI engine and could be tuned to get high high numbers. its also the same platform as a Jeep/ 4Runner, meaning ive got 4WD (4HI/ 4LO) and a friendly engine to work on (ease of access).
I feel 20/3/8 rule is a great tool. But where I am not aligned is 8% of "gross" income. Shouldn't this be 8% of your "net" income ? retirement saving / investments / tax / should be given high priority over car payment. Thoughts ?
love the car comparison. i think it should have been 3 series, C class, accord v6 camry v 6 model 3. All those cars will do 0 to 60 in 5.5 - 6 seconds. a bit better apples to apples comparison
They are underrated IMO. I went from $600 a month in gas for my 08 sequoia to $40 a month charging my new model 3. Insurance on the Tesla was cheaper than the sequoia, maintenance is just constantly filling the washer fluid. The autopilot on a long commute or stop and go traffic so is another form of luxury. Range anxiety only exists on gas cars when I think about how much gas is in the car before I leave the house and wonder if I have to account for a stop to the gas station or not. I never worry about that on an electric vehicle because it’s always full when I leave the house.
Bought a new Corolla last year. Only the second new car I have ever bought in my 50 years. We paid it off in 6 month. I’m a car guy but would have a difficult time spending more than 500 a month. 800 is crazy.
Assuming you work remote and have nice weather, how many folks could accomplish 75% of your car task using a fast electric bicycle with a huge cargo basket? No gas, no tag, no insurance, snaking through traffic jams....oh, but consider an increase in life insurance coverage.
It's crazy how many people's monthly car payment could fully pay for a nice electric bike. And the savings you get on gas, insurance, depreciation, maintenance, registration, and even your health are huge. I hope I never have to buy a car in my lifetime
I'm getting an ebike, but using my regular bike in the meantime for local errands on safe roads. I agree with you, but in a lot of places in the US it would be dangerous to ride a bike. A rider I knew died from a car not paying attention and hitting him. He was in California, so even blue states have this problem.
Even a bicycle here has a "tag". May not be true where you live. Granted I haven't actually paid for my bicycle (license or registration which ever it is here).
I bought a 17 ZL1 new for 59K, recently had a family emergency and ended up with near 30k in CC/personal loan debt. My car was nearly paid off and I had 55k in equity in it. refinanced to get off the higher interest rates.
I just wish we could get banks and credit unions to have similar rules for lending. Then we will see car prices come crashing down! I wish I had done better with my current vehicle. I still have 2.5 years left, payment is $365, 0% interest, but it was a 7 year term… we own our other vehicle, and my wife and I have averaged 10 years for each vehicle we have owned, but these ones are far lower in mileage than the last 2 we had, so hopefully they will go longer than that.
I think something you failed to mention about the model 3 is the residual value. A model 3 will require a replacement battery that will cost roughly 7-16k and according to some sources will last 8-12 years (Tesla claims 300-500k miles)
I didnt see any information on adding the charging to your home to charge the Tesla. That can easily cost you the tax credit plus just to be able to charge it.
If you live close enough to work, you may not need anything. I was able to keep up using just a normal outlet. However, if you work more than 15 miles from home, you may not be able to do that. I agree that is a great point to think about though.
So easy: - step 1: decide which Toyota best meets your needs - Step 2: understand a real wholesale value, on something at least 3 years old - Step 3: find what you want on the private market and pay as close to wholesale as possible What not to do: buy from a dealer or take a loan for more than 3 years
@@melissastroud I usually get a monthly subscription to a site called Galves. It's dealer auction prices. It's ultimately hard to pay the prices you see, but at least helps you get a sense of what a "fair" deal is. KBB and other free online is all biased information owned by Cox Automotive, who ultimately owns most car websites adn pricing sources. Point being, they have reason to show high values vs real values.
Thanks! This is great I'll really have to think about used VS new but this gives me a guideline. I'm not quite where I need to be but my car is on its last legs. I'll see if I can get a good used one but also eyeing new for reliability and to keep for 7+ years. I'm currently only saving/investing about 18% a month. I guess if I really need the vehicle having 8% go to the car and 10% in savings is far from ideal but better than nothing 🤔
So i would save for the 20% down payment beyond my 3 month savings, then pull it out? Instead of taking this out of the emergency fund and replenishing after?
There is clear value in getting a new family sized suv for many. But I agree this really cuts off at the CRV base model level. Problem is most people get the loaded model and finance another $10k over the base, for nothing but luxury features not needed to get the warranty and reliability. Hopefully used goes back to normal. Because buying at least 3 years used gets you a practically new car. But most non base model cars and all Tesla are luxury vehicals.
I want to buy a new vehicle so bad but I’m holding off. I drive an old rusted POS but it’s paid off. Was able to pay off about 40k in debt this year. I hope to he debt free in the next six months then I’ll go from there.
Currently don't own a car and commute by bicycle. I would like to buy a motorcycle though, I suppose that could count as a "luxury car" in your calculation, since it's not really a useful vehicle in that sense.
The only issue I would worry about, is that even though these cars can go 200,000 plus miles now, a lot of auto manufacturers are now recommending longer maintenance intervals. This has led to a lot of cars burning oil a little over 100,000 miles, due to these new 10,0000 mile oil change intervals. So make sure if you go used that there are records of the owner doing 5,000 miles oil changes. If not, don’t touch it even if it’s a Toyota. Also, millionaires not financing cars is really not a very meaningful sentence. If you’re a millionaire, you have the cash. Most of us don’t and we need to get to that point. Ide love not to have a payment, but I don’t have the money. I understand the point your trying to make, I just don’t think it rings true when it comes to a cost to what you get evaluation
Wow this could not be more timely for us. My husband was literally test driving Teslas last week. Right now he's washing our truck that we're going to sell first, so we can use the proceeds towards the Tesla.
I did the math and instead of 8% gross employment income,i did 8% net employment income and that's almost $400 a month! I wanted a $10k car and with your math that's $18k. That's so expensive for me, i can't justify $400 a month before even setting aside maintenance, insurance, petrol, winter tires parking fees for my area ( there's no free parking) i basically can't afford a car, even on well above average income...i don't know how others do, I'm in awe!! Honestly!!!😢
I really would like them to go into detail on how they think someone making over $120k can pay cash for a car in this economy. I know people who make that and they would not be able to buy a car in cash
Could you provide a link for how you got your costing data? What would happen if the price of electricity doubled or aligned with the costs in Europe how would that affect ownership cost of the electric cars? The studies that I have seen shows the doubling electric car usage would triple (probably more) the electrical demand and the current grid doesn't have capacity to do that. My favorite statement all models (analysis) are wrong. Some are useful. Just be certain that you're not using a faulty model when making your claims.
What if electric prices increased slightly (25-50%) but gasoline costs aligned with Europe. As for the current grid, I have an electric car and lawn mower and snow blower. My solar panels produce more than I use in electricity. Granted solar is a large expense too. Also, keep in mind, the amount of electricity used at night is way less than used during the day. So the capacity is not as constrained as it seems.
I like the straw man. Unfortunately I have a lot of experience in this area. All electricity has to be used pretty much as it's created. You can store the extra during the day in batteries if you have them, but the majority of people will dump that excess power back into the grid. The grid then has to find a use for that power. Most states have laws that require the electric grid to buy or accept that power. So I'm sure in your world, yes you generate more power than you need from solar panels. From the statement above the power generated by the electrical grid is used pretty much as it's generated, within minutes. So the peak demand times are when factories and offices open in the morning and when people arrive from home in the afternoon until bed. Many times that morning demand starts before the sun rises. As the demand changes throughout the day, the utility grid operator will tell different power generators (solar, wind, geothermal, hydroelectric, coal, nuclear, natural gas, and any other method I can't think of) how much power they need generated. When the sun is out, solar can produce a base load (as noted it can be more than a household would use) during the day, but that needs to be offset by using other sources at night. Wind energy is basically always available, but the quantity of that energy is variable and the majority of wind energy is generated a long way from where most people live and there's the moral concern with how many birds they kill. Geothermal is great, but again the locations that we have access to that energy to generate electricity is limited. Hydro has the moral concern of how the dams disrupt fish and ecosystems plus their best times to generate electricity are in the spring after winter melts. Coal and nuclear operate best when they can be set to a base load and operated continuously, but with states forcing the grid to take all electricity generated by home owners, many of these facilities are used more to cover the peak loads and that is less efficient and requires more fuel to operate. Natural gas generation is used exclusively for covering peak loads. The generators start quickly and can produce a lot of power in a short amount of time on demand. All power generation needs to work together at all times to have electricity when you need it. This helps explain why charger rates change so much throughout the day as it's cheaper to give away electricity than to start and stop the power generation method. All of that is to say, in order to support 3x the electrical demand, we'd need significantly more electric generation than is currently available. That will require more facilities that utility companies will pay for with higher electrical rates. The other thing that hasn't been discussed is taxes. A component of the cost of gasoline and diesel is the taxes that are paid for each gallon used. I expect once the ICE demand drops, governments will get to work increasing the tax on BEV's to make up for the loss tax revenue. My final point is that many things in the US are cheaper than other places around the world because subsidies are given to those industries making it very difficult to track the "true cost" for a given product. I wish those subsidies would be removed and taxes lowered so that the debate could be done easier. Ultimately if BEV sees wider adoption and ICE drops off, the cost of using a charger will go up. At home with some sort of renewable attached to the house, you might get away from those costs, but I suspect that the government will get its tax dollars somehow. (Side note: battery technology has come a long ways, but still is not where I would trust it for large scale peaking so I didn't talk about it. )
@@chrisgreen359 These are valid concerns (it was quite long so I didn't read ALL of them), but not a reason to not try. With more electric cars, you would just need to keep the (non-solar) electric generation last longer. We still use a LOT less electricity in the middle of the night. Obviously charging only at night isn't a perfect solution (not necessarily possible). While I'm not saying my comment wasn't straw-mannish, it was a direct reference to the same phrase from the post I was responding to (using gas price doubling like the electric rate doubling). I agree with you that they seemed to just stipulate the costs they used and may not be accurate.
The basics of my question and my point overall. Who ran the analysis and what were their assumptions in the model? From my previous experience, typical assumptions is that the cost of electricity will remain the same or similar and the degrade in performance for the life will be negligible. Overall, I'm completely down with pursuing all options for a sustainable future. There's a lot of new and exciting things that are being pursued. Also there are many variables that go into a decision on a vehicle for your family. Each person's experience is going to make that decision a little different.
I know they wouldn’t say this, but an EV might could go 20/10/3 because the lower maintenance. I drive a lot (25,000 miles per year 90% around town) and my Model 3 is saving me about $2,000 per year on gas/maintenance many other cars.
They did mention maintenance in the video briefly and addressed this. I'd still go proceed with the 20/3/8 due to insurance most likely increasing as well with Tesla parts.
As both a car guy and someone who is taking control of my financial future this is so much Tesla fanboy cringe. Now, while I appreciate the The Money Guy Show and what the team does, this episode makes me double down on my belief that one should never take car buying advice from financial experts. Go to the financial experts or follow their advice in terms of budget but go to a car guy for car buying advice. As much as financial experts live and breathe money, car guys live and breathe cars and the automotive industry as a whole. The amount of disingenuous facts and arguments presented to "prove" that a Tesla is not a luxury car is outrageous. I don't care what the budget is, a fully electric vehicle is still a luxury item for a multitude reasons (some of which can be disproven with Brian's own arguments).
What math are you guys using to determine based on 40k u can spend $10,971 for a car? Or the same for 60k for $16,436 worth? I’m curious to know and I just got confused tbh
I don’t understand how I’m supposed to only spend 8% on a car. Is it on net or gross pay? Cause after deductions and taxes I take home 2200 a month, meaning that at 8% I’d need a ~200 a month car payment over 3 years. That’s just not feasible
I bought a 2007 Toyota Corolla for $7000 in 2014, paid it off in 3 years at $160 a month and I'm still driving it. You just need to look for a car around $9000 that is a used sedan from the mid 2010s. It's completely doable. You may not like the car, but the point is to get you to work and home. And then you can plan to buy yourself nice car in future once you can afford it.
Money Guy always gives out the numbers as gross income. Save 25% of your gross income. Spend 8% of your monthly gross income on car payments. They say it's to keep things simple and not have to deal with calculating taxes etc.
It’s weird to see all the FUD about electric vehicles in this comment section considering this channel is all about those seeking awareness, education, enlightenment.
Hey money guys I’m a starting a contracting business and need to buy a diesel truck capably of towing a large trailer. What is the smartest way to make this purchase. Should I buy it with my personal money and finance it to my LLC?
It's your money regardless. Importantly, you should have a conversation with your personal tax /cpa to see where the benefit and most efficient way of doing it so you write down depreciation and interest payments against business expenses If you have the cash, loan the business the money to buy it Get it right at the start.
@@colinschubert4018 Business also gets to write off depreciation and interest And just remember, buying a new truck for a work truck means you're massively losing in the first 2/3 years. Buying something used that's already taken the biggest hit is also really worthwhile. Remember the game at the end of the year is to take out as much money from your company, after taxes, and pay yourself the profits. Driving a smarter car and thinking you're saving money because you're getting a small tax break is stupid.
I think you may be underestimating the ownership cost of a Tesla when you factor in known, non-recall based issues that have a reasonably high probability of occurring during your ownership period...upper control arms anyone? These cars are also jam packed with so much tech. The cost to fix these things is ridiculous if they go as well. You could extend the warranty, but as I understand it the extension costs something like $3500 for just an extra 2 years? That doesn't tickle my expected value calculations. Lets not forget the battery cost. Granted, it is probably unlikely to go within the ownership period of most people, and costs for them have come down, but they are and will likely continue to be thousands to replace. Again, we have to marry "if" with "how much" to make well informed prediction of cost and I don't claim to have enough data to make that determination at this time, but an EV purchase is on my radar over the next few years.
Money Guys, my wife and I got into a car loan before I knew about 20-3-8 rule and got into a 7 year car loan, but it is 0% interest. how do you feel about 20-3-8 if its 0 interest?
It’s dangerous. Read your contract, many of these zero interest loans have a hidden, retroactive rate if you default on a single payment. And with 7 years… you have 84 opportunities to screw up the deal.
My wife and I just bought the Tesla Model Y in Colorado which tacks on an additional $5K refundable tax credit on top of the $7,500 federal non refundable tax credit. It was a no brainer and we’re well within the 20/3/8 rule.
Literally cash. There's no benefit to financing. Focus on research and stay with reliable brands that retain their value better. Many wealthy people I've met bought brand new Hondas and drove them 10 years then passed them down to their children.
I don’t get luxury brands. You drive a car that’s built for 3 years of operation. You tell yourself that you look like a grownup to other people because you can “afford” the car. They bust your balls every time you’re for a service. And in the end you are even afraid to park it anywhere because someone might scratch it.
Traded in my dream truck for a 2023 Kia rio that I was able to put 35% down on. Took out a 24 month loan on the rest, and since bought new got 3.9% Kia financing and, comes with 100k Kia warranty. This peace of mind of a sound financial decision is WAY cooler than my truck ever was! Thanks guys for your wisdom.
Nice
A Kia payment is PEAK poor
Have had the same car for 10 years, 2004 Toyota 4Runner, 200k miles. Still love it!
Im rocking a 2006 matrix with 220k miles
The problem with this is that after 120 miles you'll spend a lot of money per year to maintain it and then the same next year and throughout the year you have to keep changing things. I have a Toyota Corolla which is 16 years old and it has no option really It is very basic and I spend around a £1,000 per year to fix it but then it gets the point which when I drive the car I don't feel confident about it. I hate to change my car and buy a used car but what can I do... 😮
@@behnamanisi1I have had an 04 Accord since it was a year old. It's needed less than $1000 in non preventive maintenance
Part of it is luck and being able to do the work yourself
I had a 2003 Camry for the longest time. Besides tires, gas, and oil it didn't need much maintenance. I was sad when I hit a deer
Nothing makes me happier than seeing Brian getting excited over his laminated financial order of operations! XD
*wobble-wobble-wobble*
Living that corolla life. 200K miles and hoping to get 50K more. Saving for my next car using 20/3/8 as the guidelines. Great, reliable content - so glad to find your channel!
Same dude, my 2010 only has 107k, hoping to get another 150k
If you change the oil every 6k miles or every 6 months it will run for another 200k+ easy haha
Camry with 177k here. Change the oil myself every 4-5k miles and top off all fluids. Hoping for another 130k with minor maintenance. My registration and insurance are such a breath of fresh air compared to my brand new Honda 2 years ago.
Have fun with just a newer Corolla cause that's all you'll be able to afford with this 20/3/8 rule (unless you be making well over 70k despite still driving an old beater)
@@StandAloneState if only it was that simple lol most cars will need significant repairs and parts replaced after that 200k mile milestone, if they haven't been having them done regularly already. My 2010 Ford Escape Hybrid was perfectly fine with basic maintenance up until the last few thousand miles. I'm at 216k and almost all at once everything that isn't included in standard maintenance started creaking, squeaking, and just straight up wearing out.
I've been told the car I have can make it up to 300k, but I have never met a single person with any car made after 2005 that has anywhere near that much that didn't buy it second hand after a total maintenance overhaul.
Most people can’t afford their cars they are driving and they don’t realize it
Great underrated comment.
Many people don't care. They just see what everyone else is driving and decide they deserve the same or better.
@@absolutelynonameslef yep marketing and keeping up with the Jones
So true! Broke without knowing it. I’ve been there.
That’s literally me
Model 3 rules - vs the Civic and Corolla…
1) That tax credit - you quickly mentioned it - but a family, particularly with young kids or kids in college, might not have enough actual tax liability to use that Federal EV Tax credit. That Federal tax credit is not refundable. Same goes for folks thinking they can leverage the federal solar tax credit - you cannot use it unless you have enough actual tax liability.
2) While routine Tesla maintenance is cheap… watch out for non-warranty repairs! Stories abound about Tesla owners getting huge repair bills that are exceedingly rare on a Civic or Corolla. Example: the base Tesla does not have a drivetrain in the front of the car, leaving the front edge of the battery pack exposed to road damage.
3) The base Model 3 is Rear Wheel Drive. That might not work in the northern parts of the country.
4) EV range in really hot and in cold climates. Do the research - you might find that base Model 3 doesn’t have enough real world range for you.
5) EV charger network - while the Tesla charging network, unlike third party chargers, is reliable, research where you travel. Outside of California, Florida and the Northeast, particularly outside metro areas, the Tesla network is not nearly as filled out.
6) EV charging cost - research your electricity charging cost, even if you intend to charge only at home. Power rates vary dramatically by location. And for away from home charging, you might be surprised by how dramatically more expensive super chargers (fast chargers) are. The popular summer spot we frequent does not have any EV chargers conveniently located.
Don’t forget to include taxes and fees when you are looking at cars. Those usually add 10% to the sale price. So to spend $22,000 you would need to look at cars with a listed price of about $20,000.
What’s the point of using gross instead of net income for the 20/3/8 rule? It makes more sense to use net income as that is the amount being used to cash flow or purchase the car.
Agreed. Wonder why they do that
It would make cars MUCH less affordable that way, using the 8% part of 20/3/8, you'd need to be making SO much more than they mentioned if you use net to ever get any car not from a family member, basically
@@uzimakiuchiha that is the whole point of This rule. It’s to prevent the overspending of your monthly budget on a depreciation asset like a car.
If they use gross that is making it seem like you can afford more care than you actually can as most people gross pay is significantly more than net pay.
Your net income is also impacted by Roth IRAs & Roth 401ks
5 years before you want to buy a car start putting enough away every month in a money market to equal what the car payment would be for it.
In 5 years you'll have enough to pay cash, tax, title, license.
Up until you buy the car it makes a great supplemental emergency fund.
When it comes to insurance it’s make a huge difference where you live. It could mean doubling the amount you would pay if you moved over to the next zip code it’s just crazy, even when you’ve never had a claim, your credit is off the chain your driving record is impeccable. That zip code could definitely double or reduce your premiums significantly.
I can attest to that since I worked in auto ins. One caller was really chill and he was excited to move to a new place.
My eyes almost popped out of my head from the $60 it would to add to his monthly amt. We were both shocked since it was a relatively safe area. We still made the adjustment, but holy ish
Still driving my 2007 Toyota Highlander w 225,000 on it. Love the video for the future tho thank you
Oh man! What great timing on this one. Thankfully, no one got hurt, but someone ran a stop sign, which led to a car wreck and my car getting totaled. I've been dragging my feet and slowly looking to replace my car. The interest rates are crazy right now. So glad to have a reliable source in the form of an up to date Money Guy Show for reference!!! Thanks Money Guys and team.
The Car Edge channel is also a pretty good car purchasing resource. They focus more on how to interact with dealers to get the best value.
We all need to plan for life's inevitable "disasters."
We need to budget for a car, years before we actually intend on purchasing one
I've had a 2005 Toyota Camry with for 15 years. It now has 361,000 miles. Looking for my dream vehicle so this information is helpful. Thanks.
I’ve been feeling the itch to upgrade ever since my car was totaled (not even driving it). I make 100k gross, but it looks like I’ll be sticking with my 100k mile Honda fit until prices drop to the point the car I want fits into the 20/3/8 rule.
Love y’all for this video, I was beyond confused on what to do when buying a car. Most people say not to go past 20% of your monthly income but doing that doesn’t make sense bc of the cost of ownership on top of life expenses. Doing 20% for the car sounds like a nightmare and on top of that repairs and maintenance and other living expenses
I might clear $400k this year, but I'm keeping my $5k car as long as j can. The piece of mind is amazing. Liability only, park anywhere, scratches, dents mud, sand, toddlers... My coworkers think im crazy.
Unfortunately, I screwed up when getting my 2018 Honda civic back in 2022.. I leased it for 72 months for a 4.4% interest rate. With a 262.42 month payment.
However, I decided at the end of 2022 to hammer the payment away. I added $100 a month and add extra at the end of the year to go straight into the car payment. Fortunately, I do love this car and plan on buying it out once the lease is done. I screwed up, but I am very happy to learn about this and from my mistake.
i LOVE my car.
ive got an itch for a new car too, but my current one is awesome.
i just hate paying for gas so my new car will be a hybrid.
but yeah, my current car is a 2017.5 nissan rogue (they made a mid year update, lol) it gets like 28 mpg city and 33 mpg highway.
I literally just got back from running errands with 35 mpg. but my next car will be the rav4 hybrid with 40 mpg city and highway.
the only reason i got my current car was due to it being an SUV with sedan like fuel economy. highway mpgs in the 30s! sadly I just had to get the brand spanking new one. man, i was dumb. but I still love her.
80,000 ish miles right now and lots of memories.
I’ve never seen a lease this long or an interest rate on one. I think you bought the car and don’t know.
I paid off my 2022 model 3 yesterday. Definitely way above 20/3/8 working at papa John's but the elteric is $125 a month vs if I were to use my mustang i would spend $750 a month on gas. Mine is a base with $2,000 worrh of upgrades the white seats and blue, sadly it was going for $48000 when I got mine but it saved me a ton on gas.
I’d recommend for used vehicles to check the data on reliability by year in addition to examining the overall reliability of the model. It’s very common for vehicles to be significantly more or less reliable one year or the next based on what happened in the manufacturing one year versus the next. And it’s not always the first year or two of a generation that is the most prone to problems like one might guess. The car might change where it’s manufactured mid-generation or have a gaff in the factory one year or have more issues due to something that was added as a mid generation upgrade. So any year can be the best year or worst year. And we’re fortune enough to be able to research much of that data for any used vehicle more than about 3 years old.
It’s also a mistake to assume that all vehicles of some brands are reliable and all of other brands are unreliable.
One should check the track record of the specific vehicle that they’re looking to purchase (make, model, year) and also consider the maintenance of the vehicle from the previous owner or owners. It can also be helpful to determine why a vehicle has a scratch or other blemish as well. A lot of those physical flaws aren’t a sign that the car wasn’t cared-for properly mechanically which is more important. It can also be a good move to buy a manual vehicle in the US which is unreliable as an automatic. Typically a bad automatic transmission in the U.S. can tarnish the resale value on all the versions. Even if the car is a manual. So that’s an edge for buyers who can drive a stick shift.
Car Complaints is a great website for learning about the best/worst vehicles and best/worst model years.
Thanks to you guys, I’ve decided my next car will be 20/3/8, but paid in cash. Using your formula to determine my budget limit.. at least until I reach financial abundance.
Hi money guys, I really like your content and would love your input and n a recent decision I made. A month ago I bought a new car, I didn’t follow your rules at all, but I think it was a good financial decision as it wasn’t an ordinary car purchase. Long story short, I really needed a new car. My 2003 Camry was dying; burning oil, 290k on the clock and just falling apart. I went with an EV, A BYD atto 3. Here in Australia there are plenty of incentives to buy them. The main one being that you can pay for them with your pretax income. With the Camry I was paying $140-$150 per week with all the expenses; fuel was $80-$90/week, then insurance, registration, maintenance, etc is another $3k or so each year. My new car costs me $201/week. BUT, that is all expenses covered. I charge it at work so that’s free, and the $201 covers ALL of the cars expenses. My weekly car expenses have gone up, but I get a full brand new car for that. I also never have to visit a gas station any more.
Thoughts?
What’s the present of your income is it and what are you saving?
@@kckuc310 my current income is $96k and I’m saving about $500 a week (our house is fully paid off). We are currently looking for a bigger house to move into.
How much oil was it burning? My Lexus burns about a quart every 1800 miles. Its an 07 with 186k
Mine is a Toyota 4 Runner I bought New in 2003, 259,000, still looks great and runs great.
Guys on the electric cars look at the cost of replacing the generator or battery pack after warranty is out. Most of the time it is more than what the car is worth.
costs will continue to drop on batttery replacments if/when they need to be replaced. 10 yr old tesla batteries have been shown to still be in good shape.
Or driving in the rain. Even under warranty. You might be pay 20k.
@kreem82 they have also been known to fail and cost $24k to replace...
That's a huge role of the dice. I would expect obscene depreciation on used electric cars out if warranty once people come to understand the risk unless cheap aftermarket batteries become available.
@@getinthespace7715 it’s a 8 yr /120k mile warranty on batteries. Most people don’t even keep their cars to 100k
The battery pack generally needs a replacement after 10 years, which is around the time most people would be looking to replace their car, electric or not. A "financial mutant" would have been saving for either the battery replacement or the car replacement by then.
Currently driving my 2005 Odyssey that's currently at 190k miles. I do want to purchase the latest generation Sienna but to do it in the most efficient way based on my budget. Thank you my dudes for this video!
What happened to your Messy Middle episode from a few weeks ago!?
0:58
Most cities and suburbs are very car dependent. What’s funny is how so many people will fight the creation of walkable cities and suburbs.
Wife and I own 3 cars. One is a 1998 Subaru Impreza I drive to work. Was my first car btw. Then she drives a 2010 Impreza. Then we have a pickup that’s a 2010 Chevy we use to pull our rv a few times a year.
I drive a Land Crusier and paid cash. It's 20 years old with 198K and I love it.
Also just an advice for those that can. If there's a brand new car that you have your eyes on and if you're in a major metro city in the US (LA, New York City, Chicago, etc), check out the Auto show where you can go inside the interior of the car and test drive them without having to deal with the bs from salesman when you're just wanting to window shop.
I did not know the Tesla models were: S,3,X,Y 😅
Did the Tesla calculation take into account if you were investing the difference of the initial Tesla price vs Corolla. Or investing the difference in the payments you would have?
No but I did the math including paying extra interest the first year you wait for the tax credit. It haaaardly squeaks by at almost the same exact impact as 800/mo for a gas car
I love these guys. My 2011 Outback has 190k miles on it and I’m borderline being able pay for the replacement in cash. We’re trying to hold onto it for 1 more year. If we can’t pay for the next car fully in cash the goal will then be to pay it off prior to the 3 yr mark.
Apologies if I missed this, but does the 8% include gas, insurance, and/or parking costs ($250/mo for me)?
Just the monthly payment on the loan! If you are worried about high outside costs eating into your budget, you can always keep it below 8% though.
I wish I would’ve found this video a month ago before my buying a car 😢 but that’s okay ! I learning now. Thank you !
Problem is when you go to the mileage the data says you need to replace your battery in your Tesla. Hopefully you have a fund that covers a new civic/corolla for it.
Prius vehicles hybrids brakes last forever too lol
Gasoline anything is fun to drive but it sucks to work on and maintain
I have a e-bike so I haven’t been to the gas station in almost 10 yrs lol
No fluid changes lol
how many miles you put on it?
I recently got a new job that where travel is required. They are giving me a $350 car stipend and would like to find something reliable with that. I’d love to some help working this into my finances.
I have a model 3 2022 I bought new and put 20% down, 6 year loan, payment $687 a month. 4.49% interest rate, I make around 80k a year and have a good amount of margin at age 22, I now own 3 properties (two as rentals) and advice on the car?
For the Tesla issue: the tax credit will be a point of sale rebate off the immediate price of the car starting 1/1/24; HOWEVER, that is assuming Tesla won’t bump it back up.
My opinion, most of the price increases were due to demand fuelled by cheap debt. Debt isn’t as cheap. So after tax wages need to rise in comparison to interest rates. OR, 10 year car loans will become a thing. $60k at 8.5% is 25% cheaper per month over 10 years compared to 7 years. Pay more of course, but most ppl driving demand are only looking at monthly payments unfortunately
I am still lucky when I had my accident and they totaled it based off the inflated value and I got extra due to my dad’s insurance and then got more for aftermarket upgrades.
Whent to a Toyota dealership got a basically brand new car and hated it they would not exchange or take it back. So I went to enterprise and they paid me 29k when I bought the car for 27k three days ago. Then got a nicer car for less
$45k Car, $9k down! Leaves $36k to finance. Monthly payment of $36/3yr loan at 2.99% would be $1046. So if you make $75k, then your 8% is off your monthly correct? 75/12=6250 * 0.08 = $500 should be your max?
BMW 2 Series starts at $38,400. Smaller than a model 3, but cheaper than a 3 series.
I’ve put 300k miles across all my vehicles I’ve owned the last 5 years… can’t really own a car for 8-10 years putting that many miles on them. They don’t make them reliable anymore. Bought a newer truck with 50k miles thinking I was doing myself a favor getting something reliable. 100k miles later and it’s cost me 28k in repairs over the last 100k miles….. I might have blown through 3 junkers for the other 200k miles but those 3 combined cost me less than the f150 service did.
Did you just say that they used to be MORE reliable!?!?
@@TEXglisson yes early 2000s through probs 2015-2016 a lot of manufacturers were still making borderline reliable stuff. Post about 2015 all manufacturers are phasing out gas cars in favor of electric and not giving a crap or spending money engineering better gas engines. Instead that money is being spent on electric cars. Thus nothing new and gas is reliable even Toyota has fallen off the bandwagon.
You guys forgot to do a case study for a battery replacement of right now. and potentially in the future. Some people are getting cases where the battery would need to be replaced and it would cost 10k+ to replace to do if out of warranty. Assumption of batteries getting cheaper in the future is possible but as of right now there are some cases of people being charged half the cost of the vehicle.
How much is a new crate motor? Uh huh. About 10k right? Love my Tesla. Troglodytes are afraid of progress. 🎉😂❤
@@mattmcfly2165 Engines last longer then batteries.
@@mattmcfly2165 not hating what so ever. ive been looking at tesla for myself but i cant pull the trigger yet bc finances are not in line. But you have to look at that as a potential maintenance/repairs. If for whatever reason the battery or whatever component fails how much will it cost. You cannot take it to any shop to repair but tesla and they charge an arm and leg for some repairs/replacements.
Do yall recommend this same advice for UTVs? Or a diff set of advice/ rules?
Im looking at doing a Mahindra Roxor (UTV). Has a 2yr UNLTD Mile warranty, jeep sized vehicle, w/ a 2.4L Turbo Diesel engine.
Its governed at 55mph, but after the warranty that can be flash tuned/ reprogrammed and the truck could go 65+ MPH. The MPG is also 30+ due to the diesel TDI engine and could be tuned to get high high numbers. its also the same platform as a Jeep/ 4Runner, meaning ive got 4WD (4HI/ 4LO) and a friendly engine to work on (ease of access).
Hey money guys, I was wondering if the 8% goes over the three year financing or is that considered 8% per year for the three years?
Single year. So if you make 100k. Don't go over 8k per year.
Great show! Love that you took in the cost to own.
I feel 20/3/8 rule is a great tool. But where I am not aligned is 8% of "gross" income. Shouldn't this be 8% of your "net" income ? retirement saving / investments / tax / should be given high priority over car payment.
Thoughts ?
love the car comparison. i think it should have been 3 series, C class, accord v6 camry v 6 model 3. All those cars will do 0 to 60 in 5.5 - 6 seconds. a bit better apples to apples comparison
Brian is so defensive about his Tesla. Also, a bit biased since he made so much money off the stock.
They are underrated IMO. I went from $600 a month in gas for my 08 sequoia to $40 a month charging my new model 3. Insurance on the Tesla was cheaper than the sequoia, maintenance is just constantly filling the washer fluid. The autopilot on a long commute or stop and go traffic so is another form of luxury. Range anxiety only exists on gas cars when I think about how much gas is in the car before I leave the house and wonder if I have to account for a stop to the gas station or not. I never worry about that on an electric vehicle because it’s always full when I leave the house.
Did you buy any upgrades and do you have a supercharger at home? @@joshuavoss1387
Less to maintain than toyotas of the same year
Bought a new Corolla last year. Only the second new car I have ever bought in my 50 years. We paid it off in 6 month. I’m a car guy but would have a difficult time spending more than 500 a month. 800 is crazy.
Assuming you work remote and have nice weather, how many folks could accomplish 75% of your car task using a fast electric bicycle with a huge cargo basket? No gas, no tag, no insurance, snaking through traffic jams....oh, but consider an increase in life insurance coverage.
It's crazy how many people's monthly car payment could fully pay for a nice electric bike. And the savings you get on gas, insurance, depreciation, maintenance, registration, and even your health are huge. I hope I never have to buy a car in my lifetime
I'm getting an ebike, but using my regular bike in the meantime for local errands on safe roads. I agree with you, but in a lot of places in the US it would be dangerous to ride a bike.
A rider I knew died from a car not paying attention and hitting him. He was in California, so even blue states have this problem.
Even a bicycle here has a "tag". May not be true where you live. Granted I haven't actually paid for my bicycle (license or registration which ever it is here).
@@gmenu8032Agreed 100% - 75% do not NEED a car. 75% currently use a car. If your commute is
Hard to do when you have to pick up kids from school.
I bought a 17 ZL1 new for 59K, recently had a family emergency and ended up with near 30k in CC/personal loan debt. My car was nearly paid off and I had 55k in equity in it. refinanced to get off the higher interest rates.
Should have sold it and bought a $25k car.
I just wish we could get banks and credit unions to have similar rules for lending. Then we will see car prices come crashing down! I wish I had done better with my current vehicle. I still have 2.5 years left, payment is $365, 0% interest, but it was a 7 year term… we own our other vehicle, and my wife and I have averaged 10 years for each vehicle we have owned, but these ones are far lower in mileage than the last 2 we had, so hopefully they will go longer than that.
Am I really the first one here!? These guys are awesome. Can’t wait to hear the financial tips on own a car
I think something you failed to mention about the model 3 is the residual value. A model 3 will require a replacement battery that will cost roughly 7-16k and according to some sources will last 8-12 years (Tesla claims 300-500k miles)
I didnt see any information on adding the charging to your home to charge the Tesla. That can easily cost you the tax credit plus just to be able to charge it.
If you live close enough to work, you may not need anything. I was able to keep up using just a normal outlet. However, if you work more than 15 miles from home, you may not be able to do that. I agree that is a great point to think about though.
Only pay for cars with cash, would not be where I am now without it, go with cheaper cars till you can afford it
So easy:
- step 1: decide which Toyota best meets your needs
- Step 2: understand a real wholesale value, on something at least 3 years old
- Step 3: find what you want on the private market and pay as close to wholesale as possible
What not to do: buy from a dealer or take a loan for more than 3 years
What sources do you look in the private sector? Craigslist, other sites?
@@melissastroud I usually get a monthly subscription to a site called Galves. It's dealer auction prices. It's ultimately hard to pay the prices you see, but at least helps you get a sense of what a "fair" deal is. KBB and other free online is all biased information owned by Cox Automotive, who ultimately owns most car websites adn pricing sources. Point being, they have reason to show high values vs real values.
40K for a model 3 with 3% interest and no down payment. Never have to change the oil again or the brakes or....
❤ I'm a happy camper basically
Do you think Teslas not have brake pads?
I think their argument is that it's a lot of opportunity cost on that $40k if that's a significant percentage of your net worth.
You still have to change brakes.
@saulgoodman2018 yes, but way less bc of the way they regen when slowing down.
Soo... how does the rule change if you work from home?
Thanks! This is great I'll really have to think about used VS new but this gives me a guideline. I'm not quite where I need to be but my car is on its last legs. I'll see if I can get a good used one but also eyeing new for reliability and to keep for 7+ years. I'm currently only saving/investing about 18% a month. I guess if I really need the vehicle having 8% go to the car and 10% in savings is far from ideal but better than nothing 🤔
So i would save for the 20% down payment beyond my 3 month savings, then pull it out? Instead of taking this out of the emergency fund and replenishing after?
There is clear value in getting a new family sized suv for many. But I agree this really cuts off at the CRV base model level.
Problem is most people get the loaded model and finance another $10k over the base, for nothing but luxury features not needed to get the warranty and reliability.
Hopefully used goes back to normal. Because buying at least 3 years used gets you a practically new car.
But most non base model cars and all Tesla are luxury vehicals.
Car manufacturers are starting to cheap out, offering what should be standard features on higher trims
When you buy used sometimes you are stuck with the model available.
I never thought about how the Tesla models are S, 3, X, Y. I don't concur, but that's hilarious. I'll see myself out. 😋
I want to buy a new vehicle so bad but I’m holding off. I drive an old rusted POS but it’s paid off. Was able to pay off about 40k in debt this year. I hope to he debt free in the next six months then I’ll go from there.
Currently don't own a car and commute by bicycle. I would like to buy a motorcycle though, I suppose that could count as a "luxury car" in your calculation, since it's not really a useful vehicle in that sense.
Does it still make since to get rid of my car if I am under water on my car loan?
Bo is so excited about everything
Stuck in a bad spot. 25k left on my Ford flex, and it's currently worth 13k. I'm not even able to ditch the car.
The only issue I would worry about, is that even though these cars can go 200,000 plus miles now, a lot of auto manufacturers are now recommending longer maintenance intervals. This has led to a lot of cars burning oil a little over 100,000 miles, due to these new 10,0000 mile oil change intervals. So make sure if you go used that there are records of the owner doing 5,000 miles oil changes. If not, don’t touch it even if it’s a Toyota. Also, millionaires not financing cars is really not a very meaningful sentence. If you’re a millionaire, you have the cash. Most of us don’t and we need to get to that point. Ide love not to have a payment, but I don’t have the money. I understand the point your trying to make, I just don’t think it rings true when it comes to a cost to what you get evaluation
Wow this could not be more timely for us. My husband was literally test driving Teslas last week. Right now he's washing our truck that we're going to sell first, so we can use the proceeds towards the Tesla.
Bo’s excited, get excited.
When isn't he.
He's taking a dump. He's like to his wife, I'm so excited. It doesn't smell this time.
Another option for high earners is set a dollar amount because it could be thousands
I did the math and instead of 8% gross employment income,i did 8% net employment income and that's almost $400 a month! I wanted a $10k car and with your math that's $18k.
That's so expensive for me, i can't justify $400 a month before even setting aside maintenance, insurance, petrol, winter tires parking fees for my area ( there's no free parking) i basically can't afford a car, even on well above average income...i don't know how others do, I'm in awe!! Honestly!!!😢
Your income is well above average but you cant afford 400/mo car payment + rest of cost of ownership? You must have to do some budget rearranging
I really would like them to go into detail on how they think someone making over $120k can pay cash for a car in this economy. I know people who make that and they would not be able to buy a car in cash
He encourages it if possible
They're not saying that. The whole video is about the 20-3-8 rule
Could you provide a link for how you got your costing data? What would happen if the price of electricity doubled or aligned with the costs in Europe how would that affect ownership cost of the electric cars?
The studies that I have seen shows the doubling electric car usage would triple (probably more) the electrical demand and the current grid doesn't have capacity to do that.
My favorite statement all models (analysis) are wrong. Some are useful. Just be certain that you're not using a faulty model when making your claims.
What if electric prices increased slightly (25-50%) but gasoline costs aligned with Europe. As for the current grid, I have an electric car and lawn mower and snow blower. My solar panels produce more than I use in electricity. Granted solar is a large expense too. Also, keep in mind, the amount of electricity used at night is way less than used during the day. So the capacity is not as constrained as it seems.
I like the straw man. Unfortunately I have a lot of experience in this area. All electricity has to be used pretty much as it's created. You can store the extra during the day in batteries if you have them, but the majority of people will dump that excess power back into the grid. The grid then has to find a use for that power. Most states have laws that require the electric grid to buy or accept that power. So I'm sure in your world, yes you generate more power than you need from solar panels.
From the statement above the power generated by the electrical grid is used pretty much as it's generated, within minutes. So the peak demand times are when factories and offices open in the morning and when people arrive from home in the afternoon until bed. Many times that morning demand starts before the sun rises.
As the demand changes throughout the day, the utility grid operator will tell different power generators (solar, wind, geothermal, hydroelectric, coal, nuclear, natural gas, and any other method I can't think of) how much power they need generated. When the sun is out, solar can produce a base load (as noted it can be more than a household would use) during the day, but that needs to be offset by using other sources at night. Wind energy is basically always available, but the quantity of that energy is variable and the majority of wind energy is generated a long way from where most people live and there's the moral concern with how many birds they kill. Geothermal is great, but again the locations that we have access to that energy to generate electricity is limited. Hydro has the moral concern of how the dams disrupt fish and ecosystems plus their best times to generate electricity are in the spring after winter melts. Coal and nuclear operate best when they can be set to a base load and operated continuously, but with states forcing the grid to take all electricity generated by home owners, many of these facilities are used more to cover the peak loads and that is less efficient and requires more fuel to operate. Natural gas generation is used exclusively for covering peak loads. The generators start quickly and can produce a lot of power in a short amount of time on demand. All power generation needs to work together at all times to have electricity when you need it. This helps explain why charger rates change so much throughout the day as it's cheaper to give away electricity than to start and stop the power generation method.
All of that is to say, in order to support 3x the electrical demand, we'd need significantly more electric generation than is currently available. That will require more facilities that utility companies will pay for with higher electrical rates. The other thing that hasn't been discussed is taxes. A component of the cost of gasoline and diesel is the taxes that are paid for each gallon used. I expect once the ICE demand drops, governments will get to work increasing the tax on BEV's to make up for the loss tax revenue.
My final point is that many things in the US are cheaper than other places around the world because subsidies are given to those industries making it very difficult to track the "true cost" for a given product. I wish those subsidies would be removed and taxes lowered so that the debate could be done easier. Ultimately if BEV sees wider adoption and ICE drops off, the cost of using a charger will go up. At home with some sort of renewable attached to the house, you might get away from those costs, but I suspect that the government will get its tax dollars somehow.
(Side note: battery technology has come a long ways, but still is not where I would trust it for large scale peaking so I didn't talk about it. )
@@chrisgreen359 These are valid concerns (it was quite long so I didn't read ALL of them), but not a reason to not try. With more electric cars, you would just need to keep the (non-solar) electric generation last longer. We still use a LOT less electricity in the middle of the night. Obviously charging only at night isn't a perfect solution (not necessarily possible).
While I'm not saying my comment wasn't straw-mannish, it was a direct reference to the same phrase from the post I was responding to (using gas price doubling like the electric rate doubling).
I agree with you that they seemed to just stipulate the costs they used and may not be accurate.
The basics of my question and my point overall. Who ran the analysis and what were their assumptions in the model? From my previous experience, typical assumptions is that the cost of electricity will remain the same or similar and the degrade in performance for the life will be negligible.
Overall, I'm completely down with pursuing all options for a sustainable future. There's a lot of new and exciting things that are being pursued. Also there are many variables that go into a decision on a vehicle for your family. Each person's experience is going to make that decision a little different.
4 wheel drive is an upgrade too.
I know they wouldn’t say this, but an EV might could go 20/10/3 because the lower maintenance. I drive a lot (25,000 miles per year 90% around town) and my Model 3 is saving me about $2,000 per year on gas/maintenance many other cars.
They did mention maintenance in the video briefly and addressed this. I'd still go proceed with the 20/3/8 due to insurance most likely increasing as well with Tesla parts.
It’s funny y’all assume the civics/Corolla are commonly found for msrp
As both a car guy and someone who is taking control of my financial future this is so much Tesla fanboy cringe. Now, while I appreciate the The Money Guy Show and what the team does, this episode makes me double down on my belief that one should never take car buying advice from financial experts. Go to the financial experts or follow their advice in terms of budget but go to a car guy for car buying advice. As much as financial experts live and breathe money, car guys live and breathe cars and the automotive industry as a whole. The amount of disingenuous facts and arguments presented to "prove" that a Tesla is not a luxury car is outrageous. I don't care what the budget is, a fully electric vehicle is still a luxury item for a multitude reasons (some of which can be disproven with Brian's own arguments).
Great video!
What math are you guys using to determine based on 40k u can spend $10,971 for a car? Or the same for 60k for $16,436 worth? I’m curious to know and I just got confused tbh
I feel justified my M3LR is not luxury now 😂. To be fair I didn’t get the tax credit since I purchased in 2022
I don’t understand how I’m supposed to only spend 8% on a car. Is it on net or gross pay? Cause after deductions and taxes I take home 2200 a month, meaning that at 8% I’d need a ~200 a month car payment over 3 years. That’s just not feasible
I bought a 2007 Toyota Corolla for $7000 in 2014, paid it off in 3 years at $160 a month and I'm still driving it.
You just need to look for a car around $9000 that is a used sedan from the mid 2010s. It's completely doable. You may not like the car, but the point is to get you to work and home. And then you can plan to buy yourself nice car in future once you can afford it.
Money Guy always gives out the numbers as gross income. Save 25% of your gross income. Spend 8% of your monthly gross income on car payments. They say it's to keep things simple and not have to deal with calculating taxes etc.
It’s weird to see all the FUD about electric vehicles in this comment section considering this channel is all about those seeking awareness, education, enlightenment.
"I'm sooo excited Brine" :D
Hey money guys I’m a starting a contracting business and need to buy a diesel truck capably of towing a large trailer. What is the smartest way to make this purchase. Should I buy it with my personal money and finance it to my LLC?
It's your money regardless.
Importantly, you should have a conversation with your personal tax /cpa to see where the benefit and most efficient way of doing it so you write down depreciation and interest payments against business expenses
If you have the cash, loan the business the money to buy it
Get it right at the start.
Thank you for this very thoughtful response 👍
@@colinschubert4018
Business also gets to write off depreciation and interest
And just remember, buying a new truck for a work truck means you're massively losing in the first 2/3 years.
Buying something used that's already taken the biggest hit is also really worthwhile.
Remember the game at the end of the year is to take out as much money from your company, after taxes, and pay yourself the profits.
Driving a smarter car and thinking you're saving money because you're getting a small tax break is stupid.
Understood I have an appointment with my cpa coming up, but what do you mean by a smarter car? And thank you I appreciate any advice
@@colinschubert4018 smarter... Fancier, more expensive than it needs to be
I think you may be underestimating the ownership cost of a Tesla when you factor in known, non-recall based issues that have a reasonably high probability of occurring during your ownership period...upper control arms anyone? These cars are also jam packed with so much tech. The cost to fix these things is ridiculous if they go as well. You could extend the warranty, but as I understand it the extension costs something like $3500 for just an extra 2 years? That doesn't tickle my expected value calculations. Lets not forget the battery cost. Granted, it is probably unlikely to go within the ownership period of most people, and costs for them have come down, but they are and will likely continue to be thousands to replace.
Again, we have to marry "if" with "how much" to make well informed prediction of cost and I don't claim to have enough data to make that determination at this time, but an EV purchase is on my radar over the next few years.
Teslas are a luxury car. All of them.
Money Guys, my wife and I got into a car loan before I knew about 20-3-8 rule and got into a 7 year car loan, but it is 0% interest. how do you feel about 20-3-8 if its 0 interest?
It’s dangerous. Read your contract, many of these zero interest loans have a hidden, retroactive rate if you default on a single payment. And with 7 years… you have 84 opportunities to screw up the deal.
just pay down the principle balance 20% and pay it off in 36 months or less!
They would still like you to pay it down in the 3-year timeframe, personally I would invest or put the excess in a high-yield savings account.
@@BiggMo Stop with that as an excuse.
@@saulgoodman2018 that was a warning, not an excuse
My wife and I just bought the Tesla Model Y in Colorado which tacks on an additional $5K refundable tax credit on top of the $7,500 federal non refundable tax credit. It was a no brainer and we’re well within the 20/3/8 rule.
Until winter when your range and charge rate drop to 0
Lol range drops 10% if that in winter
Literally cash. There's no benefit to financing. Focus on research and stay with reliable brands that retain their value better. Many wealthy people I've met bought brand new Hondas and drove them 10 years then passed them down to their children.
I don’t get luxury brands.
You drive a car that’s built for 3 years of operation.
You tell yourself that you look like a grownup to other people because you can “afford” the car.
They bust your balls every time you’re for a service.
And in the end you are even afraid to park it anywhere because someone might scratch it.
Tesla ain't sexy... it's also called a Gull wing door... not gulf wing door
Best deal is always 4-5yrs old right at 100k miles.
10 year ownership!
Mercedes A Class = BMW 2-series
Mercedes C Class = BMW 3-series
E Class = 5-series
S Class = 7-series
Remember to always follow the 23/8 rule for cars. No more than 23% of your income and the loan can't be longer than 8 years.
😂
Let's hear about when the battery needs to be replaced in that Tesla...
Most people don't keep cars that long. However, if you are a person that keeps a car for 200k or more miles, you're probably right.