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Highlights from this episode include:

  • Shocking statistics on the car financing habits of Americans (5:03)
  • What Dave Ramsey gets completely wrong about car buying (5:33)
  • Debunking the myth of 0% financing (8:59)
  • How to buy a car using life insurance… without the inconvenience of dying (11:15)
  • Dents and dings in your leased car may not matter if you do this (15:16)
  • Why you’re financing anything you buy, even if you pay cash (15:54)
Read Full Transcript

Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.

(00:20): Aloha everybody. This is Harold Green and it is time to stop doing what you hate. I am so excited to be here sharing with you today this topic that I wanted to cover. Buying versus leasing the title of the show. And I'm, I'm excited about this because buying a car is one of the biggest issues I see people facing today. And there's just something about it that that gets people all worked up. And if you're out there and you're listening and your car is pretty old and you know, you're used to driving used cars and different things like that, that's okay. But my show and the people that I'm talking to are people that want to get better in life. They want to be successful in life and they want to learn how to enjoy all the things that they've worked hard for. And one of the things is basically dealing with a car.

(01:16): There's a lot of data out there about buying cars, you know, buying versus leasing. Which one is better for you? Well today what I'm going to do is I want to have a little fun with you. I don't want to take you car shopping and what am I phrases it comes from the price is right and it's when Bob Barker, do you guys remember Daryl? Bob Barker, one of my favorite shows used to watch that show with my grandma growing up all the time. And it's a brand new car, right? Hey everybody, everybody dreams of having a brand new car and they, you know, they, they want to have brand new cars and sometimes I think people sell themselves short because they just can't figure out, you know, how to, how to possibly pull it off. It could be too expensive, you know, it could be a mindset that they have so on and so forth.

(02:04): When it comes to, you know, buying a new car. Years ago, I, I told myself, I said, you know, you work too hard to be chasing after car problems and buying used cars and so on and so forth. Why don't you figure out a way to properly buy a new car so that it doesn't hurt you so that you can still save for retirement and you can still enjoy life and not be what they call car poor. A lot of people in the United States of America are car poor because they just can't figure out how to get it done. So today I'm going to talk to you guys about a couple of different strategies out there that you can use. Two, potentially overcome the challenge and the hurdle you're getting yourself brand new. All. Alright, you guys ready? All right. One, two, three, less it at this.

(02:53): So a while back and I'll just kind of share with you guys my car buying experiences and different things. Like I've had used cars practically for a long time until I owned my business. And I realized that leasing a car is much better if you own your business. If it's done the right way. But here's the problem. Every time I would get a new car, I tell you man, not even like a month or two later. And next thing you know there's a big shiny dent and the door and the car that I own that got dented the most was Audi. I don't know why, but sometimes, you know, I just don't know why. And one of the things I found on the internet was something called overcoming new car envy. And it was kind of interesting. It's something I thrive.

(03:48): Works coaching and counseling. You can thrive, we can help. It's a, I guess it's a counseling website and they talk about, you know, the new car, NB and so on and so forth. And so I'm gonna read a little bit to you and it talks about you're at a red light. Look to your side. You see someone about your age driving the car that's younger, a nicer brand, new to boot. I think I shared with you guys a little bit about this before and it talks about how can you keep from getting into the new car? NB trap and it says many people are financing new cars between five and seven years and it's not affordable. The average car payment is about four 74 I've seen a lot higher. I've seen about seven to $800 a month. If you ask me, and it's one of the reasons many families are struggling with their finances.

(04:30): The average follower on the 66 months on a car that cost $27,000 average 401k balance or people between the ages of 22 and 34 is only 16 a thousand dollars wow, that's crazy. And the average balance for individuals between 35 and 48 is $63,000 Whoa. Okay. Basically you're 48 all right, I'm almost 48 and you only have so many more years left to retirement, but you don't have a lot saved. That's another story. It goes on to say, the bottom line is that many people are mixing up their priorities and putting themselves in the position of being car poor. I don't know about mixing up priority. Some people just need a car to get to work. Let's go with that. And then it talks about mr Dave Ramsey. According to Dave Ramsey at businessmen OD the radio host television personality and motivational speaker. The guy with the new sports car should just open his window and throw 100 bills into the wind.

(05:23): Wow. Now that's a mad hate right there. Okay. Dave has helped a lot of people, but this is where we part ways. You said that buying a car, a new car is like throwing money away. The moment you drive it off the lot. However, Ramsey says that if you are a millionaire, you can feel free to get crazy and buy yourself a brand new car. In addition, if you're a millionaire, you can probably stop reading here. All right. Alright, let's, let's part ways. There is a lot of new car hate. One of the things that I've seen from my clients and I, and I tell them, I tell them this in my workshops, you know, when come in and see me, they're about, the average age is about 52 years old. They're about to send their first kid off to college and a lot of things have just not happened right for them in life.

(06:06): Somethings great, but some things are not so great. The house needs a lot of repairs. Sometimes they're on their cars on the last leg, but they're trying to drive it into the ground because you know, they, they feel that they need to do that so they can put aside the money for college and so on and so forth. Here's one of the things I want to tell you guys. You ought to be trying to find a way for your money to work just as hard for you as you are working for [inaudible] money. I really don't believe in packing money aside and then living life like a Herman. If you're built like that and you're made like that and you can live like that, that's fine. But sometimes I feel that's a little bit self-serving because you can't really help others with that mindset that you're just going to pack away everything else for yourself.

(06:46): All right, I digress. Let me back off and go somewhere else. So I want to talk about some different strategies out there and how you can go about purchasing a car without feeling stressed out about it and so on and so forth and without feeling guilty about it. Right. You know, we don't have a lot of things in life that we can enjoy, enjoy, but there ought to be some things that give us joy. And some people will say, you know what, you're just kind of getting worked up over a car and you know, having a new car is not all that well, you know, tell that to my mini cleanse who come in and we're able to relieve that stress where they're not in the, at the car dealership every week or at the the car lot or the, you know, the repair shop every week with something new on, on their car.

(07:29): Right. So we're going to get into this because you finance everything you buy, right? If you buy a used car, I guarantee you you're going to spend extra money on a extended warranty, right? Or you're going to be burning time, which is money going into the car dealership, repair shop, getting it fixed. All right, you pay cash for your car, you're giving up interest that you could have earned had that money stayed invested, right. We'll talk about that. Or you pay interest to a bank or financial institution. And so we'll get into that. So I want to take you car shopping for a little bit and we're going to go check out some deals. Okay. So one of the things I'm going to do is I'm going to take you to Toyota. Let's see. Let's go to Toyota Hawaii because that's a very popular car dealership here in Hawaii.

(08:16): And you know when you go to the website you can go there and you can find their lease deals and different things like that. 2020 Corolla, 0% for up to 60 months or you know, 2020 Rav four 0.9% for up to 60 months. Or you get the four runner, 2024 runner for two what is it, up to 60 months, 0.9% APR. These are, these are some pretty good deals, right? You notice that you got to go and stop the scrolling and try to look at that fine print, right? Because basically when you have 0% there is no such thing as 0% basically they're telling you is, is in exchange for 0% for every thousand dollars or sold the car costs. They're going to tack on additional, what is it, like $16 and 67 cents and the, what is the other one is $17 and five since for every thousand they're going to add that on.

(09:13): So the end of that car. So when you're car shopping and you're looking at these deals, you really got to make sure that you are looking, add, define. Correct. All right? So here's the thing. If you can discipline yourself to save money for say five years for brand new car, right? Let's say you don't own a business and you want to save for so many years and then you want to just buy the car out of cash, there is a great program called bank on yourself. All right? Bank on herself as a program that I've used for myself for many, many years, even before I became an investment advisor. It's a concept built on designing a dividend, paying whole life insurance policy so that you increase the amount of cash inside to be used. Four, becoming your own, what they call a banker bank on yourself, becoming your own banker.

(10:10): Those terms are, it's anonymous where you pull money from your life insurance policy and you pay cash for your car, but then you set up payments back to yourself every single month for about four or $500 that way the money is going back into your pocket versus going to the financial institution. Well, you might be saying, Hey, if I did that with a bank as the same thing, no, it's not the same thing because here's the deal. Well, the dividend paying whole life policy, if you set it up the right way, you're going to get the same dividends on your policy when you pull the cash out, right? You borrow from your plan, you pay for your car, you pay your plan back, you're getting the same dividend. However, when you pull monies from your bank account, you lose interest, right? You're going to give that interest because now the money is sitting inside the car and I use a program for myself and in rapid retire.

(11:00): If you, if you want to know more about that, go to retire now, retire wild.com. Check out the rapid retired brochure, download the game changer form and give me a call on, let's talk about getting you guys set up. Letting me coach you. They're getting this stuff done the right way. Yeah. Back to what I was saying, when you pull money out of your policy, okay, and you pay for the car, then all your payments go back into the policy. You pay back your policy loan. The loan interest rate is very simple. It's 5% simple interest. It's not compounded, which is a way better deal. Okay? The benefit of this is twofold. Number one, you got the car, it's paid off. You don't owe anything on it. You just owe your policy back, okay? Yes. Your policy, your car does depreciate once you drop it off the lot, that's, that's a no brain.

(11:46): Everybody knows that. But here's the deal. At the end of the four years when you've paid your policy back, not only do you have money back in the policy, okay, you also have the car and you can trade the car and for probably happens value. Okay? So if it was a $30,000 car, you might get like 10 to $15,000 to put towards your down payment on the new car. So now you're taking human less out of your policy. They pay for the car. So after a while the system gets pretty efficient. All right? So if you are a non business owner, bank on yourself is probably one of the best ways you can go about setting yourself up to finance things, whether it's a car, whether it's home improvement and so on and so forth. All right, so the next thing is let's say you own a business, right?

(12:29): And let's go over here and let's check out Mercedes Benz Honolulu, because normally Mercedes, they have pretty good deals in regards to leases and so on and so forth. So I am going to go here and I'm going to look at Lulu. We're going to go to new, okay. And let's look at the new specials and see what they have here. All right, so if you're a member of Costco, you could get a deal. If you've always bought your cars from them, they have a, you know, they could give you specials and so on and so forth. And so let's take a look at some of the finance specials and see what they have. Some over here at Mercedes, Ben's of honolulu.com a lot of people think these cars are, these cars are out of reach, but they're, they're actually not. So one of the things you can do is you can go and check out these websites and then look through their inventory and see what they have.

(13:26): So I'm going to just type in lease lease specials and see what they have. All right? So let's look at the Mercedes-Benz GLC lease specials and see what they have. RA. So a GLC, and that's about a 45 to $50,000 car, depending on the package that you get. And you can click on their inventory button and see what they have. So basically it's 43,000 but the lease came out to something like four, $400 a month, which is, which is not bad if you're talking about the average car payment is like $400 a month. If you own a business, then you can talk to your tax professional about writing it off and what else goes into it. And that could save you a lot of money. That's a, that's a tax break for you. So you, you might want to talk with your tax person if you, if you own a business, one of the things to watch out for when you lease a car is the mileage situation.

(14:19): Sometimes they scare you about the miles. And what they do is they say, well, how far do you drive? And you'll say, X number of miles. I say, well you want to, you want to ramp up the miles and if you are a person that has to drive far every day and you put a lot of miles on your car and maybe losing is not for you, but you know if you put about seven to 10,000 miles on your car, then it might be in the running for you. Okay, so that's something to look into and a lot of people are afraid that if they go over the miles, it's going to be something horrible, but don't forget you own a business. And so all of those expenses can be tied back into your business and even if you have extra cost and so on and so forth, you should be able to write that off.

(14:56): But you may want to just double check with your tax person and make sure that is correct. Another concern people have is the dents and the deans. What I found out is this, if you're loyal to a particular dealer and you always get your cars from them, they normally forgive the dents and the dings and just put you in a brand new car for your next lease and then you're on your way. It doesn't take a lot. The problem is if you don't want to lease from them again or you don't want to buy from them, that's when they start to give you hassles and problems and different things like that. But loyalty to a certain brand does have as privileges. And so you know that's something you kind of want to look into as well. All right, so that's for the business owner, but now let's talk about the other strategy where you have money saved.

(15:38): Let's say you have a hundred thousand dollars sitting in your portfolio and you've always said, I don't like debt. I will always pay cash for everything. But again, you're going to finance everything you buy. So if your account, it's earning you 10% a year, which even in this downmarket, there still some portfolios that are up 10% you just have to know where to invest. Not everything is down. Let me just sidetrack here for a second. You know, I was talking to a client and I shared with them that you cannot look at the stock market as a whole. You know, the market was down today, but some other stock could be up 10% right? You can't look at it in totality. You have to break it up into different segments like consumer technology is tech, FinTech consumer discretionary materials on and on and so forth.

(16:25): So you have to understand where to put money during different times so that you can continue on. And if you need help with that, give me a call. I'll coach you up and and the rapid retire program and we'll hope you get that done. But for example, you got a hundred thousand dollars earning you basically 10% a year. And again, past performance is no indicator of future results. If you're gonna invest money, you got to check out what you're investing in because all investments do have risk of loss. Okay? So I'm just going to put that out there. But again, a hundred thousand dollars earning you 10% that's $10,000 $10,000 a year will basically either pay your car payment for you, all right? Or it'll pay a lease payment for you, okay? And you still keep your principal. The problem is is you say, you know what, I'm going to go buy that $43,000 GLC.

(17:11): I'm going to cash in $50,000 well guess what? You just lost $5,000 right there making that purchase. But what else did you lose if you bought that car? Cash, you drive it off. The lot is going to depreciate on you right there. So you bought a $43,000 car that's probably now worth only $30,000 and you're giving up another $5,000 a year and potential interests that you could have earn on investment portfolio. All right, so buying versus leasing, it all depends on your particular situation. For me. I prefer leasing for my business car, for my wife. Moving forward, I'll probably buy her new cars. We're not sure yet. It just kind of depends on, yeah, what she's going to do and so on and so forth. But we'll have to take a look at that. But going, going a step further is you have to tie this into your long term a financial plan.

(18:08): All right? So if you're tired of dealing with the car issue and not knowing what to do, it's time to stop doing what you hate. Don't worry about people being jealous of you having a new car. I know that's an issue for some people, especially, you know, if they have a family that tends to get down on wealth and they tend to beat up on wealth. And I did my last show title, wealth haters and how to avoid them. And this is one of the things people hate, is when somebody gets a brand new car, they always think that you're in over your head. You're paying way too much for it. But in some cases you're actually not. All right? There's some good deals out there to be had, but you have to put car buying into your long term financial plan. Just like if you were going to put in vacations and on sauna, so forth.

(18:51): We just can't let these things happen. We can't let our cars break down and then we don't know what to do. This is where we get into some problems. So if you're ready to stop doing what you hate and wasting money on cars and not knowing how to find the best deal, check me out. Retire now, retire wild.com right. Download the game changer form. Get in contact with me and I will seriously help you guys stop doing what you hate. All right, so until next time, thank you guys for letting me rant and rave a little bit today. Hopefully you guys learned a little bit about how to buy a car and not feeling bad about owning a new car. You work hard for your money, your money should work hard for you in return. All right, so until next time guys, ladies and gentlemen, one, two, three let’s get it..

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