Hello, everyone and welcome back to a new video sean's, a name and finance, is the game. Today i have been seeing some absolutely outrageous numbers for monthly payments on people's credit reports lately, which is why i wanted to make this video, how much or how expensive of a car should you be purchasing based on your financial situation? That's what i want to talk about today now real quick. I do want to thank cover insurance for sponsoring this video and guys. I don't usually do sponsored ads or sponsored videos on my channel if you're a longtime subscriber you would know that.

But when cover insurance reached out to me, i actually really liked their business model and decided to integrate it on my channel. They just have some of the lowest auto rates in the industry. I mean some policies are starting as low as 35 dollars a month and it's just another one of those really great fintech companies who are bringing kind of a modern look into the car insurance industry. By bringing transparency to us.

The consumers, which i absolutely love - and i know all of you, love as well - they have a whole slew of benefits. One thing that i thought was really cool that no other insurance companies do is they'll actually spot a customer up to 250 to get started. So that's like wicked cool, because i know a lot of people can be in a really tight pinch when it comes to their insurance policies. But i will say that one little caveat is that their target market or their risk appetite, is really designed for people in their 20s or very early 30s.

So if that fits you, i would definitely recommend checking the description to get a quote. It's super easy to get a quote as i've shown you and if you have any questions at all, you can basically text an insurance agent and get a response immediately, which is another really great feature that i like, but that's pretty much cover insurance in a nutshell. So again, i want to thank cover insurance for sponsoring this video and allowing me to do what i love and i highly recommend everyone actually goes and checks it out, because i would never promote and do a sponsored video on a product. I don't believe in so pick that for what it's worth? Okay, but anyway, uh, like i've, been saying i've been seeing tons and tons of credit reports lately with super high car payments, and i've been asking people what kind of car they drive and how expensive it is because i'm just interested in those financial numbers - and it's Been blowing my mind lately and for those who don't know, i'm not like some creep.

That's just pulling a bunch of credit reports. Lately um. I am a mortgage broker in a bunch of different states, so i see like over 100 credit reports every single month. So i see lots of the stuff on a daily basis.

I mean when i'm seeing a 750 car payment with someone who makes like 3 000 a month, something just isn't really adding up, and i know the new 2021 ford mustang mock e is absolutely sick. I mean shush but come on a 50 000 car, isn't something we can all afford, whether we want to or not so how much car can we afford, based on our income and spending habits, except i want to change that question to how much cars should we Afford to align with our wealth building goals and there's a bunch of rules out there on how much car you should afford. If you follow this rule, like the 24 10 rule, the 23 8 rule or like the 10 or the 50 rule or the shut up and take my money rule, there are so many out there and they are all general ideas on how to go about purchasing A car and the main problem is that everyone focuses on that specific cars, monthly payment or just that specific car purchase in general right they're, not looking at the entire situation, so they're, saying hey. If you put x amount of dollars down for x, amount of payments, that's going on for x, amount of terms and y equals mx plus b.

Then you're good and you can follow those rules because i'm not saying they're wrong. They are good guidelines to follow, but everyone likes to over complicate these things when in reality, i just like to use a simplified common sense in regards to wealth building. You see, cars and trucks are depreciating assets that lose value over time. So when you purchase that 50 000 ford mustang by the time you go to sell it or get a new car, you have effectively lost 50 percent of what that car is worth.

So now let's take a step back and actually take the car out of that scenario. Let's say you bought that fifty thousand dollar car doesn't matter whether you bought it cash or whether you financed it. But let's say in about six years i showed up at your doorstep and i said: hey give me twenty five thousand dollars. Would you be in a financial situation to be able to do that? Simple as that, and that's the common sense that i like to use when purchasing and deciding whether a car is right for me, because if i were to show up at your door first of all, you'd tell me to f off, but second of all, you most Likely wouldn't be in a financial situation to be able to afford that most people cannot afford a 50 000 car.

So why is everyone doing that? I have no idea it's the same principle as much as you don't want to think that it is wake up and smell the roses, because when you buy that 50 000 ford mustang machine you're whipping around your neighborhood thinking, you're the coolest guy in the world. Well, guess what, in six to 12 years, when you go to sell that car, considering the average consumer holds a used car for 11 years and a new car for six years, you have effectively taken a 50 percent haircut. That is why we are drowning in debt. As a civilization, we buy things we cannot afford now.

Yes, i can get super technical in this video start talking about the 60 40 run rule that i made a video on in the past, which you should totally watch if you haven't seen it already, but i talk about how to specifically budget and manage your money And sure i could basically factor in the 6041 rule i could factor in inflation depreciation. I could factor in car maintenance. I could factor in opportunity cost. I mean there's so many things that we can kind of break this down and over complicate this, but in reality it's super simple, just don't purchase more than what you can afford.

If you can swallow that 50 percent haircut in a couple of years, then by all means go purchase that super dope car, but just know that it is okay to buy that 2016. You know chevy malibu, because it's still a great car and it will actually allow you to get out of the rat race and start building some wealth every purchase i make either builds my wealth or hinders my wealth, and if that purchase hinders my wealth, i have To then look at and see if i can afford that hindrance on my overall goals of what kind of financial wealth i want to be building in my lifetime, if you're constantly purchasing cars that you cannot afford, you will never build wealth and you will constantly be In the rat race of working 24, 7 for the rest of your life and while this is just a youtube video and it's not financial advice at all - that's how i do things and you can take it or leave it, but ultimately, how you purchase your vehicles Is up to you, i personally buy my vehicles cash because it's hard to finance an appreciating asset right. I hate making payments on a value of a car that it's nowhere near that value anymore. But again, that's just me, you do you, otherwise.

I hope you enjoyed the video, that's what i'm here for please hit the like button. If you did share the video with a friend who balled out on a car that they probably shouldn't, have of course subscribe for more content like this and again check out cover insurance link down below, but good luck in the car buying world. And i will see you in the next one: you.