- 6 months ago
If you don’t want to be like everyone else, then you have to avoid the number one wealth killer that nobody talks about… let's talk about it!
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00:00if you don't want to be like everyone else then you have to avoid the number one wealth killer
00:04that nobody talks about take a look at this chart it shows how the average person spends their money
00:10each month and believe it or not one of these categories is quietly killing your chances of
00:15building wealth so let's uncover it together first up housing this is the biggest slice of the pie
00:21so it's definitely the wealth killer right well although paying rent or a mortgage is expensive
00:27at least it provides you with a place to live next taxes nobody likes these well unless your name
00:33happens to be gary stevenson but let's not get into that next utilities and household expenses they're
00:40not fun to pay but you can easily get them down by calling around for the best deals how about
00:46all of these there are so many of these little expenses but most of them are flexible so that
00:51leaves us with one section left can you guess what it is transportation car payments insurance
00:59fuel repairs parking all for something that goes down in value every single day the average new car
01:06costs nearly forty eight thousand dollars it's not an investment it's not building your wealth and in
01:12most cases it's just a financial black hole on wheels that's why out of all of these expenses
01:18transportation specifically your car is the number one wealth killer and it's only getting worse
01:27there's been an absolute explosion in the amount of money people are on their cars
01:31it's honestly getting out of control let me show you what i mean in 2005 total auto loan debt was sitting
01:39at 720 billion dollars five years later it reached 850 billion fast forward to 2020 it's rocketed
01:48all the way up to 1.38 trillion and in 2025 we're sat at an all-time high of 1.62 trillion dollars this
01:57has led to more people than ever being what i like to call car poor this is when you're making just
02:03enough to cover your car payments but not enough to build wealth at the same time it's like you're
02:08trapped on a treadmill that never slows down but why get on this treadmill in the first place well more
02:14people than ever care about their image and driving a nice car is one of the quickest ways to impress
02:20other people the car industry spends billions of dollars convincing you that a new car is going to
02:25transform your image confidence and maybe even your love life they don't show you sitting in a traffic jam
02:31on a rainy tuesday after getting slapped with a 600 repair bill clever marketing makes you feel like
02:37success is finance but really it's a lot of you being fed to keep you trapped look at the cyber truck
02:43that wasn't sold on practicality or daily use it was sold on the image of power and looking like
02:48you're straight out of a sci-fi film social pressure fuels this too nobody claps when you drive an old
02:54honda that's paid off and running smoothly but if you roll up in a brand new bmw on finance people tend
03:00to give you approval and assume you're doing really well for yourself i see so many young lads these days
03:05trying to look successful rather than actually trying to be successful especially in cultures where car
03:11ownership gives you credibility this need to look rich is what's causing this to happen it makes
03:16people stretch their money so thin that the car actually ends up owning them this car poor trap gets
03:22even worse for some people as they borrow more than the car is actually worth it sounds silly and you
03:28might be thinking why would anyone do that but it's actually very common and it's called being in negative
03:34equity or upside down on the loan in q4 of 2023 nearly one in four people were in this exact position
03:42so this could result in you owing forty thousand dollars on a car that's only worth thirty thousand
03:48this means you're ten thousand dollars in negative equity i've actually had a lot of people email me
03:53after reading my free weekly newsletter saying it helped them avoid traps like this and even make a bit
03:59of extra money with some of the strategies i share it's something i just do for fun and i really
04:04enjoy reading the replies so if you want me to send you those emails too i'll drop a link in the
04:08description anyway if you want to avoid being car poor like most people then you need to understand
04:13the true cost of that so-called affordable car sitting in the showroom i feel like a lot of people
04:21don't understand that the sticker price of a car is far from the true cost of owning that car
04:27let me explain take a look at this honda civic it's the most commonly purchased car by people aged
04:33between 18 and 24 in america and on the surface it looks like a sensible choice the sticker price is
04:41twenty seven thousand eight hundred and sixty seven dollars which seems reasonable however
04:46let's dig into the true cost to own this car over five years first up is depreciation and on this car
04:53that's ten thousand nine hundred and ninety nine dollars this cost starts the second you drive your new
04:59car off the lot as it drops 10 to 15 percent in value before you even make it home over five years
05:04you'll lose nearly eleven thousand dollars to depreciation alone think about that eleven thousand
05:10dollars just gone all because time passed and your car got older it's like paying two thousand two
05:17hundred dollars every year for the privilege of watching your money evaporate next is insurance
05:24this is nearly twelve thousand dollars over five years and that's a conservative estimate this
05:29figure is based on a 40 year old with a perfect credit score and a clean record if you're a young
05:35guy then this number is actually much worse you're probably looking at double that sure you can get
05:40this down a bit by calling them every single year negotiating and never staying loyal to one company
05:46but it's still going to be a high cost even if you do manage to get a bit of a discount each year
05:51then there's fuel six thousand four hundred and fifteen dollars just to keep the thing moving
05:57this is actually getting so expensive now for financing this is the cost of not having cash up
06:04front four thousand seven hundred and nineteen dollars over five years assumes you've got a
06:09decent credit score and put down ten percent but if your credit score is bad then you could be looking
06:15at fifteen to twenty percent interest rates instead of the six to six and a half percent i'm showing
06:20here that's why i always drill home the importance of building up a good credit score by having a credit
06:26card and putting small monthly expenses on it that you pay back in full at the end of each month this
06:31means you avoid paying any interest and prove that you're a responsible borrower next up is maintenance
06:38three thousand two hundred and twenty four dollars over five years for oil changes brake pads tires
06:45the list goes on however you can do this a lot cheaper if you learn a little bit about cars i used
06:51to race in car championships so i know the ins and outs of how to fix stuff on my car this has saved me
06:57thousands over the years i mean if you learn to change your own oil you'll save 30 to 50 every single
07:03time and if you buy a basic obd scanner for 20 to 30 bucks you can diagnose most problems yourself
07:10instead of paying the garage a hundred dollars just for them to plug it in and tell you what's wrong
07:14then taxes and fees this is just the government's cut road tax registration and inspection fees will
07:21come to around two thousand eight hundred dollars over five years finally we've got repairs we'll budget
07:28one thousand seven hundred and ninety dollars for this over five years these surprise expenses are
07:33killers if you're not prepared for them even reliable vehicles like the honda civic will eventually need
07:38repairs beyond normal maintenance this is exactly why you need an emergency fund of three to five
07:44months of your living expenses without it a single major repair can derail your entire financial plan
07:50with cars it's not a matter of if something will break it's when so let's add all this up drum roll please
07:58you're affordable twenty seven thousand eight hundred and sixty seven dollar honda civic
08:04actually costs you forty six thousand eight hundred and twenty one dollars over five years but it gets
08:10even worse than this as this doesn't even consider opportunity cost
08:17this is where it gets really painful let's look at a five-year comparison between someone that chooses the
08:22car and someone that chooses to invest if you decide to choose the new honda civic in our
08:27example then after five years you'll only be left with nineteen thousand two hundred and ninety five
08:34dollars this is of course after reselling the car at its current market value that's assuming it's
08:40been well maintained with minimal damage that's a loss of over twenty seven thousand dollars in net worth
08:45no wonder it's such a wealth killer however if you choose to take that same seven hundred and eighty
08:50dollar monthly payment and stick it into an s p 500 index fund based on the historical average return
08:57of around ten percent per year after five years you'd have approximately sixty thousand and sixteen dollars
09:05of course past results can't guarantee future returns however if it followed the same historical pattern
09:11then that would be a gain of over thirteen thousand dollars in net worth that's a price difference of
09:17forty thousand seven hundred and twenty one dollars that means by choosing the car over investing
09:23you could be giving up forty thousand dollars of wealth most people repeat this cycle every few
09:28years for their entire working lives this is just one example of putting your money to work you could
09:34choose to invest in starting a side hustle buying a rental property or even launching your own full-blown
09:39business the key is getting your money working for you instead of against you that's not even
09:44mentioning individual stocks and crypto although they are riskier investments but to put it into
09:50perspective if you'd invested that same forty six thousand eight hundred and twenty one dollars
09:54in microsoft stock five years ago instead of the honda civic you'd have seen a 224 total return
10:02turning your money into over a hundred and fifty thousand dollars today think about that for a second
10:07the same money that bought you a depreciating car could have bought you a small fortune in one of
10:13the world's most successful companies the point isn't that you should never own a car it's that every
10:18financial decision has an opportunity cost every dollar tied up in something that loses value is a
10:25dollar that's not compounding in your favor you might be thinking if this is true then why aren't more
10:30people investing and to be honest i think it's because they don't understand how to actually do it back in
10:35my day it used to be very difficult as you had to phone up a stock broker however now you can use
10:41platforms like trading 212 right from your phone you can set up an account deposit some money and then
10:47search for s p 500 if you want to keep it simple and away you go as i was planning on talking about
10:55trading 212 anyway i reached out to see if they'd be interested in sponsoring this portion of the video
11:01they agreed and are also offering a free fractional share worth up to a hundred pound to anyone using
11:07the code tilbury in the promo code section of the app now look i get it in many places not having a car
11:20means losing opportunities a study by capital one actually found that 67 of people said owning a car
11:27opened up income opportunities they wouldn't have had without a car so that shows that sometimes
11:32there is a clear opportunity cost of not having a car so i'm not against getting one but if you're
11:39smart about it you can still free up hundreds per month to invest so if you want to buy a car and
11:45invest then here are the three steps i'd recommend following step one buy in the sweet spot this is when
11:52you buy a car that's three to four years old with 30 to 40 000 miles on the clock this is great because
11:58you dodge the brutal first year depreciation hit but still get modern safety features reliability and
12:05often remaining warranty coverage a car that costs 35 000 new might be 24 000 at this age so that's 11 000
12:14in instant savings you can invest instead step two follow the 15 rule your total
12:22transport costs including monthly payments insurance fuel and repairs should never exceed 15 of your
12:29monthly income if you earn three thousand dollars per month that's a maximum of 450 dollars for all
12:36car expenses push past this and you're getting dangerously close to becoming car poor step three
12:42keep it for more than 10 years this is where you actually build wealth most people trade in their
12:48cars every three to five years which is financial madness instead buy once and maintain it like your
12:54financial future depends on it because it does if following these steps saves you three hundred dollars
13:00per month compared to buying new that's three thousand six hundred dollars every year invested at 10
13:07annual returns that becomes more than a hundred and eighteen thousand dollars over 15 years that could be
13:12the down payment on a house all funded by making smarter car choices if you want me to walk
13:18you through how to set up and invest in an account step by step then i'm going to leave that video
13:22right up there but don't click on it just yet make sure to subscribe if you want to grow your wealth
13:27okay i'll see you over there
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