Is Your Car Payment Wrecking Your Budget? – Episode #686

On this episode of The Dentist Money Show, Matt and Jake unpack the real cost of car ownership. From rising car payments to the hidden impact of depreciation, they explain how cars can quietly derail your budget and financial goals. They push back on the idea that success is measured by what you drive and offer practical rules of thumb to keep your budget in check. Tune in to learn how to align your spending with your values and drive your finances in the right direction.

Related Readings

Why Are Cars So Expensive?

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Podcast Transcript

Matt Mulcock: Welcome to the Dentist Money Show where we have Dentist make smart financial decisions. I am Matt. I’m here with Jake. Jake, what’s up man?

Jake Elm: Not much. Hey everybody. I’m just stoked to be here and talk with you today. This is great.

Matt Mulcock: I know it’s always good to have you back. It’s so easy doing podcasts with you ’cause you write so much and you. it’s awesome because you write about a lot of pertinent things and today is no different. We’re talking cars. let’s first start with, I think, condolences. Maybe Jake condolences to your Jetta. You wanna talk about that?

Jake Elm: Yes. Um, at the outset here. Yeah. I don’t want to come on here and be the Debbie Downer for all of the car lovers out there. I’m sure

Matt Mulcock: Gonna be, you’re gonna be.

Jake Elm: Maybe a little bit. Maybe I want to a little bit. yeah, let’s talk about my recent car situation. ’cause that’s what brought this up, spurred me on to write this article into this podcast is I’ve been thinking about cars a lot recently. So yes, I used to drive a 2012 Volkswagen Jetta.

Matt Mulcock: Mint Classic, just antique.

Jake Elm: Man, I hated this car, Matt. I really did not like this car. I, so yeah, it was 2012, I think I bought it in 20 14, 20 15. I driven it for about 11 or so years. This car was not glamorous. I mean, I mean for anyone who knows a Jetta, you know, to see those out on the road, it was silver too, right? I think silver cars, what’s your preferred car color, Matt?

Matt Mulcock: I’m pretty basic. I’m like a, usually a white or a black, maybe like a, there’s some, there’s some cool colors out there. Now, I like these kind of like, like Toyota does these like, you know, charcoal or the.

Jake Elm: Yeah. There’s like that gray, that matte

Matt Mulcock: Blue, Matt

Jake Elm: Don’t

Matt Mulcock: Yeah. Yep.

Jake Elm: I’m more of a, yeah, black or white is my typical style. I think black looks the best. Harder to clean though,

Matt Mulcock: That black looks the best, uh, when it’s clean, but it looks dirty really quickly.

Jake Elm: Yeah. Anyway, I’m silver. If you have a silver car out there, please don’t be offended. I just think that’s the bl right

Matt Mulcock: Yeah.

Jake Elm: Color.

Matt Mulcock: And coming from a guy who drove a

Jake Elm: And I drove one, right. For 11, 12 years. Yeah. I had this Jetta. here’s the deal. I didn’t love this car. It was kind of a bit of a lemon. I had to put a lot of money into it. It was never great. but I, when I bought it, I just paid for it all up front in cash. It was really cheap. It was a used car. so I have not had any car payments over the past. Well, yeah, 10, 11 years. Um. Which is my favorite thing about the Jetta. You may be asking me like, well, Jake, why we, why did you keep driving this lame car that you didn’t like that had some issues with it? And my reasoning was, I just really loved this stupid car because it made me, it allowed me to not have a car payment, which I, which just felt really good as I’m starting out my career and doing different things there. And so,

Matt Mulcock: You loved. You loved not having a car payment more than you hated the car,

Jake Elm: And I’m not a car person. You, we, for those listening, you’ll understand that as we get through this conversation here, not a huge car per person. Um, we’ll talk to, we’ll address the people who are car people, I think a little bit later on. But anyway, I drove this Jetta for 10, 11 years. It got me from point A to point B. It was fine. It worked. Um, I’m talking in past tense though here because yeah, recently this car decided to die. I

Matt Mulcock: Rip, rip jet. Did you, do you, are you in a car? Are you a guy that names their cars?

Jake Elm: Oh heck, no.

Matt Mulcock: Yeah, I, that’s the most unshocking thing I’ve ever heard. I literally like color me unsurprised on that one. I can’t think of anyone less likely to name their cars.

Jake Elm: Truly my mindset that truly a tool, right? Truly something that gets me from point A to point

Matt Mulcock: Hey, hey Jake. If you had a dog, would you name it or it just be dog?

Jake Elm: This is where I’m gonna get in real hot water here. We cannot get into the dog conversations, um, here. We’ll, we’ll stick to offending the car people out there. yeah, did not name my car. It was just my dumb Jetta is what I referred to it in my brain. but it got me from point A to point B. It did die recently. I was driving down the road just I, I can’t remember where I was going, and just a piece of wood just flew out in front of me and I ran over it and the tire popped. And my car has one of like the lug nuts. Again, for the car people out there, if that’s not what they’re called, right? Like the, the screws or the bolts that keep your tires on, right? The take off. I have those ones that are like still proof that you have to have a certain key to

Matt Mulcock: Oh yeah.

Jake Elm: The bolts or something there. Anyway, long story short, I had to take it into a mechanic for them to take off the cars. I took it in. They take a look at it. They’re like, um, come take a look at your car here. The transmission’s not working. One of your doors doesn’t lock. You need all new wheels. Your brakes are about to die. If you go take this car out on the road, you’re probably gonna endanger yourself and other people. Right. It was kind of their

Matt Mulcock: Like, how have you been driving

Jake Elm: Exactly. Which I kind of knew in the back of my mind. It wasn’t super old again, 10 or 11 years is an old that had 200, over 200,000 miles on it.

Matt Mulcock: Good for you.

Jake Elm: Um, but anyway, so I was like, okay, it’s probably about time that. Turn this thing in and actually get a, a different car for us to drive. so again, after years of driving this really lame Jetta, my wife and I decided to go the opposite end of the spectrum. And we got the coolest car that we can find, which was a Honda Odyssey van

Matt Mulcock: Ooh, Ooh. That’s a, that’s, that’s an, the definition of an upgrade right there.

Jake Elm: Um.

Matt Mulcock: Is this one?

Jake Elm: This one is white.

Matt Mulcock: Okay.

Jake Elm: So back to our black and white conversation. We did the basic white. Yeah. So our Howards, again, not, not being a car person. My wife had a car like a Honda. What is an HR-V? If you’re familiar, my wife and I not car people. So. Again, I can, I can, I’m fine being corrected, but Hondas and Toyotas are pretty lasting and durable cars, they seem like, and so we’re like, we’re gonna stick in that route. We don’t care about being flashy. So we have two Honda cars now. So I took her old car and she’s now driving the minivan. Um, that helps with the growing family here year.

Matt Mulcock: Lots of minivan talk. Here are the internal chambers of, of dentist advisor’s offices because Taylor also upgraded and got his, his green van, and then you got the. The white van. So a lot of minivan talk here around with these young dads we have here.

Jake Elm: Yes. It just, they’re so functional. Matt, again, they’re so lame. Fully acknowledge if you think I’m lame. You’re right, right. Kind of forgetting the minivan.

Matt Mulcock: That’s like our, our motto here. If you think we’re lame, you’re

Jake Elm: You, you are probably right, but I’m telling you. Okay, so here’s like the nerdy dad stuff. If you can move every chair in and out, all the chairs come in and out. Huge trunk space. Pretty good gas mileage. Um, it drives nice, it has bells and whistles. It’s like for a family. So we have twins and probably more kids coming down the road. just works,

Matt Mulcock: Well, the, you don’t have to worry about your kids banging the doors in the parking

Jake Elm: Automatic doors. Easy to get in and out. Ton of space. anyway, I’m a mini band

Matt Mulcock: Over form. Function over form, for sure. Yeah.

Jake Elm: But

Matt Mulcock: By the way, by by the way, I’m just reminded every day what a dad we all are because just really quick side note on this, as we talk through this and we’re talking about the trunk space and the features of a minivan and how great they are. I was over the weekend with my brother’s house and we’re sitting with, with him, his wife and their neighbors and we’re all just sitting around chatting. And I walked up on the conversation ’cause I just, uh, got there and they’re talking about, they’re, they’re talking about their power bills.

Jake Elm: Yeah.

Matt Mulcock: And like comparing power bills. And I was like, how did we get here? How did we get here? On the Sunday afternoon, we’re sitting here talking about our power bills and we’re sitting here talking about like, this is our life. Jake. This is it.

Jake Elm: For all of

Matt Mulcock: It does

Jake Elm: Another funny side note is, so my Jetta that we’ve been harping on, it actually had a huge dent in the front of it. Um.

Matt Mulcock: The main, like the fender up front, is that what

Jake Elm: Not defend, like kind of on the side, like the passenger side front, kind of a big old dent in it. And how it got that dent is I went to the store to get fertilizer like I do four times a year for my grass. Speaking of dad, this is what jogged did on my memory.

Matt Mulcock: A four, four step process.

Jake Elm: Do the IFA four step process throughout the summer. I loaded up all, so I have a, a decent size lawn. I have to do two bags, like of each of these different fertilizers and I do the. My gosh, we’re really into this, like the humate, right? And the amorite and all of this stuff, right? Yes. So I put all this in a cart and I’m go, I’m just, I’m uh, pushing it out to my car, my car here, and for some reason I just let the cart go and I was on a slight hill and the cart just rammed into my Jetta. This was a couple years ago, and again, this shows how much they care about my cars is I just kept it. I did, I

Matt Mulcock: Gives it some character

Jake Elm: It didn’t make sense for me to replace it. I knew I was gonna be replacing it soon. So doing the dad things of getting the fertilizer,

Matt Mulcock: Denting. Your Jetta.

Jake Elm:  My, in my Jetta, um, that I no longer own here. But yeah, we switched to the Honda Odyssey here recently,

Matt Mulcock: Perfect. Okay, so we’re rolling two Hondas, feeling like we’re gonna roll these into the ground as well.

Jake Elm: That’s the idea. Yeah. Um, I guess we can get into the lease first, buy conversation. That’s not really what we want to get into today, but kind of my point here. So we’ve been driving this odyssey for the past couple of weeks. It’s been awesome.

Matt Mulcock: Wait, did you buy that? Did you buy this or lease it?

Jake Elm: We bought it,

Matt Mulcock: Bought it. Got

Jake Elm: Sorry. Yeah. We, we could, yeah. We, we bought the, the Odyssey. It was getting used a couple years old. Um, again, just classic non-car people. This is the route we route, we chose to take.

Matt Mulcock: We literally could not have picked two worst people to talk about cars on the podcast. For real, both of us, just not

Jake Elm: Yeah, it might have been good to have. So yeah, another car person to maybe balance this out, but we’ll try and as we go along here, I think we’ll try and speak to the car people. ’cause I have clients and people I work with who are car people, like a nice fancy car. And we’re not judging you at all for that. Um, but I’ve found over the past couple of weeks, Matt, that while I love the New Odyssey and even the old car that I got from my wife is an upgrade that I had with the dumb Jetta, um, I kind of missed the Jetta. The reason I’ve been missing it is I just hate having a car payment. Just call me a financial advisor. Call me a car hater. It’s

Matt Mulcock: Nerd, nerd.

Jake Elm: Having, it’s like, yeah, the Odyssey is great, but it was really nice not having a car payment. And really, if we’re speaking like in past tense here, not having a car payment did wonders. For my budget for the past 10 years, I really do believe in starting out and getting into my career and starting a family. It was really a cool thing to not have anything for 10 years. And I really, I think that attributed what that gave me was a lot of flexibility, allowed me to save a little bit more money. and so that’s what I wanted to get into with you a little bit today is the financial impact of cars. how that impacts our budgets, the pros and cons of having an nice car, so not nice car and, and dive into all of that.

Matt Mulcock: This is so great. ’cause again, so relatable. Everyone I think listening to this probably drives a car, owns a car, leases a car. I think this is a huge topic, in kind of a core, kind of big part of our expenses. And what I like about this, we were talking before we got on that. This’ll lead to as far as, I’m guessing when I, we were going, when I was going through our outline and reading your article, I think what this will lead into is a more expansive conversation around values and like how we spend money and how we being intentional about our spending. So yeah, I think this is great. And this led you, all of this led you to some stats around how expensive cars actually are.

Jake Elm: Yeah. This is one of those things, again, to preface before we get into some of these stats here, cars are a necessary expense for most of us, right? This is where this, I think it’s a fun. Good financial conversation to have because cars are necessary unless you live, I guess, in a city or a place with the walking distance of things. But for most of us, a car’s unnecessary expense. But is it is an expense, right? We usually do not view cars as an investment. They do not hold their value. They depreciate a lot over time. You’re probably always gonna have to have some mode of transportation throughout your life. It truly is an expense. It’s a necessary one, but there are different levels of how much of an expense it is and how much they impact your budget. So yeah, let’s get into some statistics here. cars are kind of expensive. I think that was the title of that article.

Matt Mulcock: Yeah,

Jake Elm: Uh, it’s like the first point I wanna

Matt Mulcock: Of expensive.

Jake Elm: They, they really are. And I want to, I can get to an anecdote in things here, but according to the Wall Street Journal, they produced an article, I think a couple of weeks ago, just detailing the average cost of new cars and used cars. So the average cost of a used car in the US is about $25,000. There’s average cost of used. The average cost of a new car is about 48,000 or 49. Close to

Matt Mulcock: Did did that. When you read that, A, did you know the numbers before? Like, or did that, like how did that strike you? It sounds like you’re saying that that struck you as expensive.

Jake Elm: It does doesn’t. Does that seem pretty reasonable to you?

Matt Mulcock: No, well, the used car ones I think probably. I was like, yeah, that makes sense of the used cars. I think the new car, I’m like, yeah, dang. We’re getting up to an average of $50,000. Like that’s expensive. For sure.

Jake Elm: Well, yeah. Another thing I have in here too that I found, this is from the Wall Street Journal again, which is that in the US the cost of a new vehicle has gone up about 22% since 2019 or 2020. So the last five years

Matt Mulcock: Pretty big jump.

Jake Elm: We’ve had a, you know, 22, 20 5% increase there and used. I know used vehicles have gone up 31%, so used vehicles have actually gone up in price a little bit more than new cars, over the past five years, yet COVID type of

Matt Mulcock: COVID thing was crazy. That’s, that’s when I was driving a Tacoma that was like, I’d bought it a year or so before, and then when COVID all happened and used cars were going crazy, I went and I wanted to upgrade my truck. So I went in and literally made $5,000 on my car.

Jake Elm: That’s insane. I remember that time where used cars were people were selling their used cars for more than they bought ’em for.

Matt Mulcock: I did. It was the weirdest. It was like the weirdest situation. Such an anomaly like COVID created so many anomalies, but that was one that I luckily took advantage of. But it was a wild time where you were literally making money on used cars.

Jake Elm: We need Robbie here for the macroeconomic view of why that happened. I, I think it’s a lot of just supply chain issues and we’re still in that place where not a lot of new cars are being built and so used cars values are just naturally going up to, to fit demand there. Um, so yeah, 48,000 or 49,000 new car, 25,000 used car payment wise, ’cause most people will buy

Matt Mulcock: I was gonna say, most people think of him as the payment.

Jake Elm: As the payment, so the new car, average payment is about $745 a month, or $750 a month is the average new car payment and used is 500 or 520.

Matt Mulcock: See, that to me is more, not shocking, but that to me is more. maybe jarring when I see that compared to like the overall price. And part of that is rates I think have gone up over the last few years with it. So

Jake Elm: Rates right now for people who are listening to this. Who knows when’s going, but it was around six ish percent or so, maybe up to seven for a new car that’s at least, yeah. Where mine was around there.

Matt Mulcock: Yeah. So that’s like, man, that’s tough. Like that’s 7 45 a month for a new cars. That’s

Jake Elm: And, and how about this? More than one in five new vehicles purchased have a monthly payment of a thousand dollars or more, right? So average is 745 or $750 a fifth of those, right? Kind of 20% or so are a thousand dollars or more or more. Uh, a month is what people are buying. So this is when I say I wanted to, well, I think cars have expensive. To put this in context, this gets into a bit of our values conversation and what you prioritize in your spending. I’m a golfer, for maybe people have listened or know, I, I really like to golf. I. Um, so I like to golf. Uh, I live here in Utah. This is where kind of den Pfizer’s headquarters is at here. One of the benefits of living in Utah is golf is fairly inexpensive here compared to other states, which is kind of nice. We have a lot of public courses, that people have access to. Golf around here usually costs about $50 around to go play golf. again, not

Matt Mulcock: Not bad.

Jake Elm: It’s still an expensive sport compared to if you’re pickleball or biking or do a lot of things running. Whatever you can do for free, $50 every time is not cheap. Plus you have to pay for balls and equipment. Golf is expensive, okay? But in Utah it’s relatively $50 for a round of golf is not bad compared to a lot of other places. Or a hundred, $150 you can get into. so I was just doing the math in my head, Matt, as we’re going and we were buying this car. I remember sitting in the lobby or waiting for the car dealership to

Matt Mulcock: Worst part about the whole process. Worst

Jake Elm: You, get you to buy the warranty and all the right, they, they’re just hammering you with all

Matt Mulcock: Mats. Yeah, the mats. Yeah.

Jake Elm: But I couldn’t help but thinking. So when you talk here, I’m getting to a point here. we kind of, we have a limited window for golf. It gets cold in Utah. We usually golf like April to October is the golf season. I was doing the rough math in my head. I’m like, okay, an average new car costs about $50,000. Like we just detailed there, I could golf from April to October, twice a week, every week. For the next 20 years for the same price of one new car.

Matt Mulcock: Whoa.

Jake Elm: And that kinda just blew my mind. Like I could do this thing that I really love, this hobby that I have for the next 20 years and twice a week’s a lot. Like I didn’t even golf twice a week. That’s a lot of golf. I could do that for the next 20 years for the price of this one single car. and so that what made me like in my mind be like, man, cars are kind of expensive. Like this is a big financial decision to make. Um, it’s a. Like if you’re buying a car, it’s a good thing to consider the pros and cons and the trade-offs here. Yeah. Golf for 20 years for the price of one new car.

Matt Mulcock: It’s an interesting mental exercise and that was, I, that part of your article caught me too. That’s where I think that, like you said, this whole values conversation comes in. It’s interesting and it makes sense that you are translating that to one of your biggest passions and hobbies, which is golf. I translate pretty much all currency conversion for me is Chipotle burritos, uh, or Chipotle burrito bowls. So I, I, I don’t even know how many burrito bowls that’s gonna get me. Uh, for a lot of burrito. I could eat Chipotle four days a week, which I pretty much do for the next hundred years, probably for that equivalent. No, but I, I think it’s an interesting exercise because. I don’t know if people do that enough or do this enough, which is and I think, so what we’re talking about here is trade-offs, right? Where I think too many people from what we’ve seen, have what I would call a, a black and white binary solutions mindset versus a trade-off mindset.

And that’s why I think this exercise makes so much sense when we talk about spending is there is no right answer here, but there is a. Every decision you make comes on The other side of that decision is a trade off. And that’s why you’re saying with this car is about this car. This is 20 years of golf. Like that’s an, again, there’s so many things people out there that could, that they can and should be doing this when they’re, when it comes to big decisions they’re making financially.

Jake Elm: And this is the thing where cars are a little bit unique in this conversation where you’re like, yeah, I have to have a car. I have to get around. Most people want something safe and reliable too. If you’re traveling your family and carrying your family in your car, you don’t want something safe and reliable there too. But yeah, we would encourage you to do this with other, any other transactions and purchases you’re like you to buy. It’s like, what? I rather have this one big thing. Or would I rather have this other thing? So I wanted to, Matt, get into some more numbers here of the trade off between not just spending on two different things like golf or a car, but the trade offs being, okay, if I’m buying this car, what does that mean for my savings or my budget there? And how does this impact me down the road? You know this Matt, the best selling car in America is the Ford F-150.

Matt Mulcock: Yes. We just talked about this Ryan and I, like a month or so ago.

Jake Elm: Yeah. For the past 40 years, plus like every single year. F-150. Um,

Matt Mulcock: Here. We love them.

Jake Elm: Kind of wild, right? People just love a truck. I just, I get, again, as a non-car person, I just don’t get

Matt Mulcock: I mean, I know just in my life, direct connection to my life, I know probably off the top of my head, four or five people who drive an F-150. So yeah, I mean, it’s, it’s a beloved car

Jake Elm: It’s cool. My dad has an F two 50, um, and that thing is like so spacious and

Matt Mulcock: Oh, yeah.

Jake Elm: And I’m always calling him if I ever need

Matt Mulcock: Oh, that’s the problem with owning a truck. Exactly.

Jake Elm: Yeah. I always call him for anyway. So Ford F-150 bestselling car in America. what, $70,000 would you say Matt does average

Matt Mulcock: I mean, yeah, if you’re going, I mean, I’m, I’m going off the top of my head, but yeah, I think that’s probably pretty fair for, uh, if you’re talk, you’re talking new.

Jake Elm: Yeah, it just like a new F-150.

Matt Mulcock: I think they’re probably in the high sixties, low seventies. If you’re talking like a raptor, you’re going, which I see those all over the road.

Jake Elm: See those two?

Matt Mulcock: Um,

Jake Elm: Well, this is the thing is you’ll see, I see Ford F-150 is like, oh, it’s a beautiful truck. And almost every time they’re pulling a a hundred thousand dollars boat

Matt Mulcock: Or more. You know what boats are now? These new boats, they’re like freaking houses. Dude, it’s

Jake Elm: My in-laws, my in-laws are boat people. Boating’s amazing. I love it. It’s so fun. We do Lake Powell for people who are out here on the west coast. We know like Lake Powell’s, like the desert, boating paradise. You know, Matt, me and you go fairly often.

Matt Mulcock: I just got back. Yeah.

Jake Elm: Every time I go it’s like, yeah, you have this awesome nice truck and it’s pulling this really cool sweet boat and I’m like, that is $300,000 going down the road right there.

Matt Mulcock: Yeah. Oh no, the boat alone. These new boats, I’m not kidding you. First of all, they’re, they’re now doing basically mortgages on some of these boats, 20 plus year loans on these boats that are, some of these brand new ones are 200, 2 50 plus for some of these, like super nice, you know, wake surfing wakeboard boats. It’s, it’s wild. So if you see a brand, if like if you are driving down the road and you see. Let’s say a Ford Raptor pulling a brand new master, what are they? Oh my gosh. Mastercraft. It just like totally had a brain aneurysm. So if you are seeing, uh, Ford Raptor pulling a mastercraft brand new mastercraft, that’s probably, it literally could be $400,000 going down the road right there. That’s a, that’s a house.

Jake Elm: It’s a house. Yeah. Driving down the road. Um. Yeah. So, but quick aside, thank you to all those people who are doing that for me so I can come and ride on your boat. It’s really fun. I mean, having a friend or family member who

Matt Mulcock: The best kind of boat to have.

Jake Elm: You know, the

Matt Mulcock: It’s so true.

Jake Elm: Are the friends and family who take that sacrifice for us to have

Matt Mulcock: Yes. Yes. We really appreciate that. Please keep buying them.

Jake Elm: To all the boat people. Okay, so back to our Matthew. Let’s say it’s $70,000 just for easy round numbers, $70,000 new truck. Let’s say you finance this truck at 6% over five years. Mean five years is the most common length of term. We’re seeing a lot of eight year loans

Matt Mulcock: I know I’m seeing that too.

Jake Elm: Which is another discussion we can get into stretching out your payment and just straight things out there. But let’s just do a five year, so $70,000 truck, 6% over five years. Your monthly payment is 1350. Um, is where I used stand and that doesn’t include gas, insurance, maintenance, you know, just your, car payment. So 1350 a month for a $70,000 new car,

Matt Mulcock: That’s a $2,000 a month. All in cost probably.

Jake Elm: Somewhere around there. Yeah. So let’s compare. Okay, so 1350, let’s compare that. Let’s say instead of buying this Ford F-150, you’re like, I want to go something cheaper. You can actually buy a 2025 Volkswagen Jetta for about $23,000.

Matt Mulcock: Okay.

Jake Elm: Brand new one. So pretty cheap. Con Jettas are on the cheap brand here for a new car, $23,000, 6% over five years, your monthly payment’s $445 a month. Um, so the difference between those two is about $900 if we wanna use round numbers, $900 difference between those two cars. let’s say, you know, you’re like, okay, well if I, if I did this trade off, instead of getting the truck, I got the Jetta, save myself 900 a month. Um, let’s say you blew some of that and other things, eating out with friends or whatever, but you had 800 extra to save. Were to put away, like by making this car decision, you gave yourself an extra $800 a month that you’re going to then save and invest. If you put away $800 a month into the stock market in the Broad Index fund for 30 years, let’s say you earned 8% rate of return, a conservative rate of return on your investments there at the end of 30 years, you’d have a million, almost $1.1 million after 30 years.

Matt Mulcock: For

Jake Elm: Um, for retirement, that’s a million dollar difference, Matt, in your net worth over 30 years by just picking a cheaper car. Like that’s just by making that single decision, like, I’m not gonna do the nice new car. I’m just gonna have a cheaper car here. That seems pretty meaningful to me. Pretty significant.

Matt Mulcock: It’s huge. Yeah, I think so. There’s two parts of this, right? There’s, there’s the future trade off that you’re making that you just highlighted, and then there’s the one. Earlier that you made around translating it to something in the here and now that like of what this translates into like for you, for golf. Again, I just can’t stress enough how I think, how important I think this is. I, I always, I think I’m a little weary always when we talk about things like this as advisors, because you said at the very beginning, we don’t want this to we, we don’t want to come off. Lecturing and saying like, you should not go buy nice things. You know, I think the idea here is just the awareness of what this actually translates to seeing the math like that is no joke. That’s a million dollars in retire. That’s $40,000 a year in income for you

Jake Elm: Yeah.

Matt Mulcock: In retirement. That is no joke. The other thing I’m thinking about Jake, is uh, what that translates to even for like. Let’s say experiences, trips, things that you can be doing with your family. Again, just trade offs there. I don’t, I don’t think enough people think about that enough of doing some basic math of like, what am I choosing to give up by having this, this thing that may or may not bring that much joy to me? It it just like, that’s, I think, the biggest issue.

Jake Elm: Yeah, and it’s a non-car person. It doesn’t. Right. Like we have this new Odyssey is awesome, but my life is the same. Right. I have a new Karma payment now, but it’s like my life really hasn’t changed all that much. But yeah, I, I don’t like doing this exercise with every purchase we make. Like, I think it’s, I think we can go overboard because it’s like, well, okay, should I not buy shampoo or not buy this new, like you can always do, like, if you don’t buy this thing. If you invested that money instead over 30 years, what would that come out to? You can kind of beat yourself to death with kind of doing that exercise over and over and like where does it stop? But the point that I like to bring up is most of the time if our budgets, if you’re feeling tight or like you don’t have any extra cash, or your savings rate isn’t where you want it to be. Nine times out of 10, it is the big fixed expenses that are really hurting your budget rather than like the extra trip to McDonald’s or the coffee shop or like, you know, Matt getting guac on your Chipotle burrito, whatever. Like, it’s not those things, right? It’s, it’s the big fixed expenses that really impact our budgets and have a long term impact on our ability to save and retire and. Transportation costs are usually the second biggest cost, you know, expense in people’s budgets next to housing. and so getting your car payment right, or making sure you’re fully understanding the trade-offs, I think is important, right? That’s why we’re, I’m, I’m bringing this up here, where it’s not like you just don’t spend any of your money, you know, we, we don’t want you to enjoy any of your money.

That’s not the conversation here, but it’s, car payments are a big deal. And again, just having a nice car to a less nice car, hundreds of dollars a month difference, which can be huge.

Matt Mulcock: Yeah, I think what you’re referring to, Jake, is the classic latte advice I call it. Right? It is like save a latte a day, and what does that turn into? And again, that’s true. Those numbers, you could probably square the numbers the same as far as. What you’re spending money on daily when it comes to eating out or lattes, whatever.

So I think, again, the principle remains the same. Think about your money in the, in the form of trade-offs and the fact that it’s fungible and, you know, dollar saved here can trend. Like all of that is true, but I think you’re totally right here and emphasizing that I don’t think enough people think about the big. Let’s be honest. House and cars. Like if you’re talking about like, like you were saying earlier, if you’re talking about struggling with cash flow or personal spending, or you’re not even tracking your spending, it chances are like, start with the big things first. Those are gonna have the biggest impact. That’s the whole idea of like, stop tripping over dollars to save pennies. Like if you’re driving a hundred thousand dollars car and you’re not getting guac on your burrito at Chipotle because you’re like, I’m saving money. Like it’s not gonna move the needle much for you.

Jake Elm: Yeah.

Matt Mulcock: Is the main point.

Jake Elm: And again, being, not being a car person, I’m kind of okay being a little Dave Ramsey ish. You know, I think on this topic where, I know we try and walk a a, a balance there, but just to put some numbers behind this, again. The average savings rate in America today is about three to 4%. Kind of goes between those two, and that’s average. That’s not median, so that’s brought up by the people who actually save a lot of money. So the median savings rate is actually zero. Percent like America, like the, the middle person in America doesn’t save anything really hard to save money. There’s a lot of different reasons for that. But when I look at, okay, the average savings rate’s 3%, median household income’s actually like $75,000 or so, right? In America. But I say, okay, median savings rate is zero, but the average used car loans about $500 a month. If you could say like that, if you could just get that lower save $500 a month, your savings rate’s going to ex explode. I mean that’s, that’s maxing out a Roth IRA for the year.

Matt Mulcock: Well, and I think to our audience, I think we take all of these averages and move them up multiple tiers, right? Because we’re, you know, we’re talking if we’re talking about at least the people we work with. And again, I think our typical audience, out there we’re talking if the average used car is 25,000 and the averaged new car is 48. We’re having conversations with people contemplating purchases between 80 and a hundred thousand dollars for a car, I think is the typical, at least our practice owning kind of mid-career dentist. So the numbers are obviously much bigger. We’re talking about average Americans, which dentists are, let’s just be honest. They’re not

Jake Elm: Yeah.

Matt Mulcock: So much, much bigger numbers. so if you were talking about, you know, a $500 payment, now let’s talk about a thousand or $1,500 payment.

Jake Elm: Yeah,

Matt Mulcock: Just get that much bigger.

Jake Elm: But even, yeah, even talking on those more elevated numbers, let’s say again, we want you to buy. If you’re a huge car person, you love driving a nice car, it brings a lot of value to your life. Go for it. Buy the nice new cars. It just may mean maybe I’m cutting back in other areas. Right. Maybe I’m eating out a little bit less or taking one less vacation. Or maybe a slightly, you know, I’m pick on this vacation. I’m doing a little, yeah, I’m doing like a less nice hotel. Go ahead Matt.

Matt Mulcock: So, but here’s the question. Do Jake, in your experience, do people actually do that? That’s the question,

Jake Elm: No.

Matt Mulcock: Does it? Right? I don’t think they do either.

Jake Elm: Yeah.

Matt Mulcock: So I think that’s our, our point here is it’s not a, to me, when I read through this and we were talking about it, it’s not even about cars for me, broad, more broadly. We’re talking about intentional spending, and this is something we’ve been harping on a lot lately. Lauren and I just did a, a budgeting conversation and she wrote, or she’s writing articles on that as well. But such a pertinent conversation around we’re, again, we’re not saying live this austere like lifestyle. Eat rice and beans. Don’t ever spend your money, save, save, save for the future. We’re actually internally reading, right? Jake? We’re internally reading as a, as a advice, as a, as a advice team Die with Zero. And I think it’s actually a super interesting concept. Maybe we’ll do some content on this. we advocate so much for the point of all this is to spend and enjoy your money. I just think cars are one of those big categories that I see a lot that people tend to, buy mindlessly or via comparison or again, with a little thought. I think we’re just trying to highlight the impact that can have on your finances in general.

Jake Elm: Here’s a broad example. Let’s say you’re looking for a new car and the payment would be a thousand dollars a month, but maybe you’re like, you know what? I think I could get a car that’s a couple years old and it’s still gonna function. I’m still gonna like it, and now I can go from a thousand dollars payment to a $700 a month payment just by doing that, by lowering your payment by $300 a month. That’s an extra family vacation maybe over the course of a year. That’s like 3000 plus dollars over the course of the year. And maybe that’s more valuable to you than having the car that’s two years newer or three years newer.

Matt Mulcock: Perfect example. I love, I love that you just brought the up, Jake. I just decided to shout out to all my Disney people. Shout out to, to Kelsey and Mike, you know, who you guys are, uh, for inspiring this, but, I’m taking my kids on a Disney cruise it for how, or October. And I was shocked how a not crazy expensive it was, but you just gave a number of. $300 a month, $3,600 for the year. This cruise, I’m covering the flights with miles. The cruise itself for, for two kids and me. We’re talking 3,600 bucks. Like literally the whole trip together is gonna cost ’em about four grand.

Jake Elm: Yeah.

Matt Mulcock: That’s

Jake Elm: That’s a, yeah, that’s a big impact there. So like, we just want you to be thinking about that. So as you’re looking for a car, these bigger purchases be like, yeah, is this really worth, and maybe it is, right? Maybe the new nice car that’s three years older, I mean like that’s brand new, is worth the extra 300 a month. But maybe it’s not. And maybe, and if you go and if you do cut back a little bit, you can do some other things. Um, you can go on a trip with your family and maybe that’s more valuable or, or do anything else there. And so, yeah, that’s what we want you to focus on.

Matt Mulcock: I wanna talk practically here for a second around cash flow and when, when, if someone’s out there listening, being like, okay, like I’m with you. You know, I’m not really a car person either. I bought this car that I’m driving right now because of X, Y, or Z reason on a whim, whatever. And I know it’s too expensive. But I want to talk practically for a moment, Jake, for people out there listening who let’s say perhaps are organized with their, with their cash flow, with their net worth, they’re tracking some of these key components. and let’s say they have their savings under control. Like, I, I want to just, I guess just emphasize this as well, is like, we are huge advocates for as long as your savings and investing bill is taken care of first, and you feel comfortable with what you’re putting away for the future. Which I think a lot of our listeners, and I know a lot of our clients are in this position, spend your money on whatever you want.

Jake Elm: Sure.

Matt Mulcock: So if you want to have a thousand dollars car payment and you’re still saving 15, 20% of your income for the future,

Jake Elm: Knock

Matt Mulcock: Even though Jake and I are sitting here saying like, okay, here’s what the numbers bear out for the future, and yes, you could save even more money. We don’t really like do do your thing like have fun. Go drive the new car like that. That’s okay.

Jake Elm: 100%. If you’re at a 15, 20% savings rate and you wanna buy a nice new car, go for it. We almost. Don’t even care what you spend your money on. If you’re at

Matt Mulcock: We don’t. I definitely don’t care.

Jake Elm: Yeah. Like that’s a really good aggressive rate. If you’re doing that early enough, you know, the math will play out that you’re gonna get to a good financial independence number over a couple of decades. Yeah, feel free to spend your money on, on whatever, like the problem becomes when you do not have that, you’re struggling to get to a 10% savings rate and you’re getting have two car payments that are a thousand dollars each.

Matt Mulcock: Or if you, yeah, exactly. So on the opposite side of that spectrum, if you’re the dentist out there listening, thinking, man. Can’t save any money. I feel like I’m outta control. I don’t have, I don’t have, like, I, I’m not putting away anything to a Roth or to, I’m not saving anything for the future. I don’t know what’s going on. I guess what we’re saying is in those situations you might wanna look at something like, well, what kind of car are you driving? What’s your car payment? And that’s like a huge impact.

Jake Elm: I spoke with a dentist a couple of weeks ago, who, they just came to us. They were looking for some advice. They were struggling with their budgets and their finances. They had around 60 ish or so thousand in credit card debt. Okay. They were just struggling. Didn’t know how to do, like, please help us get out of this. Can you look at our budget to see how we can try, you know, interest is accruing. How can we get out of this? And we went through their budget and we were going through different things and they gave up suggestions like, like, I know we should probably like cancel our Netflix. Like let’s, we can cancel our Netflix. We can stop eating out a little bit more. Like those are the suggestions of we need to cut back on these things. But I noticed they had two car payments that were $850 each. So they’re spending $1,700 a month on cars and that’s kind of, and so then we’re able to pay unable to pay off this debt, and their suggestions were, could we cancel Netflix? I’m like, well, there’s, there’s $1,700 a month here in car payments. That’s likely the biggest culprit to why you got into this bit of a mess here.

Matt Mulcock: And did you bring that up to them?

Jake Elm: I did. Yeah, and that was our first conversation was, you have these cars here, and then I had the not very fun conversation of. Would you? I mean, this is an easy lever to pull. I mean, not easy, but this is a lever you can pull that will make a big difference. Would you be okay downgrading cars, you know, can you go from the $60,000 card to the $30,000 card? Does that

Matt Mulcock: And was that met with resistance or was that met with openness?

Jake Elm: They gave me the, oh, yeah, that makes sense. Um, we’ll look at it, right. Type of answer. Like, yeah, that makes a ton of sense. We need to think about it. Right. And so that’s just what I’m bringing you up is it’s usually not these small things that are getting you into trouble. It’s these, it’s these big purchases. It’s not the Netflix, it’s not the coffees that you’re getting. It’s not the drink with your mail. Um,

Matt Mulcock: See, I have. I have a story too, Jake, that I think goes along with this. Not in the car realm, but in, um, houses. They’re a huge, even a bigger right? We’re talking even bigger impact on the cut on the other end of the spectrum. Another client of mine, longtime client, shout out Marne. She loves getting shout outs and I mean, I’m gonna give her one. So talking to them multiple times a year for several years, something that’s always been on her mind is a new. House and, I credit her and, and Randy so much with having a mindset of intention. And this has taken time to cultivate. This has taken time for them to, like, especially for her to come around with this time to this mindset.

But we were talking recently, this has always kind of come up for her over the last few years. Like, I kind of want a new house and she’ll, she’ll sometimes send me listings, like, what do you think about this? And like, pretty big upgrades. Over the last few years, but last time we talked, we were chatting about it and we just, I was asking some questions and we were having this conversation and she goes after, for like 30 minutes. She goes, you know what, I like the idea of a house, but I don’t really want a new one. I don’t think I, I like to, I don’t wanna give up my vacations. And I thought it was so cool that like, I was like, oh my gosh. Like, okay, this is all of these years of working together and you, I credit them completely of. Cultivating this mindset of immediately realizing, okay, like I like the idea of a new house. Cool. But also I like traveling four times a year or three times a year to these nice places.

Jake Elm: I think that’s perfect. I think it also takes time for us to cultivate the sense of what we want. Right where it’s, I, I think we don’t understand, like, again, sometimes we just buy the new cars because Jim down the streets got a new car and that looks pretty sweet to me. And I think I make about as much money as him and I’m gonna go buy that same car. And we just don’t. I think it takes time too for us to figure out what really is important to us. What do we value? like you said, maybe you’re fine just driving the beater car, that it’s okay if you, you know. Have your fertilizer cart run into it and makes a dent into it. And that doesn’t cause me too much stress because I know it’s a crappy old car and I can spend more money on golf for other things or go to ice cream a little bit more with the kids. And I value that more than having maybe the nice new, shiny car that I’m worried about you getting ruined.

Matt Mulcock: I’m so glad you brought this up because this is something I’ve been on quite a bit lately and just been thinking about and kind of contemplating myself in my life and, and with clients and as we do content, is this idea of, we said, I said this in our meeting yesterday, right? I was like. I just think one of the biggest problems out there is people just don’t know what they want and they don’t know why they do what they do with their money. So, I’m gonna give an example. I was listening to a podcast the other day and they, uh, they were having a conversation around comparison and this idea of how we compare each other. Um, and Jake, maybe you’ve written about this before. I don’t know. I’m actually gonna, I, I’m thinking about writing about this myself, but do you know how the lottery works in the uk?

Jake Elm: I do not.

Matt Mulcock: Compared to the us So the lottery, I think in the us, I don’t think it’s it’s hit yet. Maybe as the time this comes out, the lottery it, last time I checked it was up to like 500 million here in the us and so you, in the US you buy a lottery ticket and if you win, you, you win, right? As an individual. What the UK does is they call ’em, I think they call ’em like postal code lotteries. So you actually, they just pick a postal code. There and if you bought a ticket in that postal code, you win together. Okay. Kind of crazy. It’s kind of cool. So one of, I think within the last couple of years, one of the, one of the lotteries included a new car. Okay? So one of the postal codes won a new car and then some researcher. What they found, what they found was, this was crazy. So the people who bought a lot of chicken in that postal code got the new car. What they found though, right after was that. Sales of that car that was given out for the lottery went up like five x

Jake Elm: Wow.

Matt Mulcock: I thought it was so enlightening. Just to this topic of, I think most of the time, and I’m saying myself, I, I’m trying to be introspective and be aware of this myself and then hopefully like sharing this with people. But I think if we’re being real with ourselves, I think most of the time. W we don’t even fully know why we do what we do with our money or why we even desire a new car or, or this specific car, or that specific house, or, I don’t think, I think it’s happening in the background and we don’t even fully, again, fully understand why we’re even having those desires in the first place. Why? Like, I think a lot of it’s just copying each other and we, we don’t even know it.

Jake Elm: I think that’s right. Yeah. We see it all the time where I will go through someone’s budgets and I ask, you know, explain this category to me, or this category to me, and they don’t really have a strong reasoning, right? It’s just, I, this is kind of where we’re at with our life and this feels like the right thing to buy. We get this a lot too when we, you know, as financial advisors, a lot of our job is, we’re trying to. Predict a little bit about what’s going to happen in the future. Like can we set some broad parameters about where we want to go and things that you enjoy. And when working with our clients, we actually like to ask them as we’re starting our relationship and ongoing, it’s just remind ’em, okay, what are we working towards here? Right? Personal finance is very personal. Everyone has different goals and dreams. What do you want to do with your life and how do you wanna use your money? The funny thing is, is most people are like, I, I don’t know. Like I, I think I want to travel more with my kids. I wanna work a little bit less, I wanna spend more time at home.

You know, I more often than not, I get these generic, broad answers, but you’re okay. Again, I’m not faulting anyone for giving those answers, but I do think it takes time. And more intentionality, like you said, Matt. I just love focusing on these conversations of just trying to keep asking ourselves, what do we actually want? What do we value? What are our priorities? What do we like doing? And I think if we can keep nailing that down in our lives, it makes our. Purchasing decisions a lot easier. Right? If we can just keep reminding ourselves that, like, then it makes like, oh, you know what I, I don’t want this car. Right? Maybe, you know, we always do the vacation example. Maybe you actually hate vacations, right? Maybe you’re the personnel that, I mean, that’s the whole millennial thing in this new generation is we love traveling a million times a year. Maybe you’re actually the personnel that’s like, you know what? I love sleeping in my own bed and I hate traveling, and I actually love revving my freaking engine down my street and my red. Corvette, and it’s just the coolest thing ever. Um, but then that makes it easy. We’re like, you know what? I’m gonna spend on the Corvette and I’m not gonna do the vacation. That I feel like I’m getting pressured into take because I’ve just, I’ve identified that within myself. Anyway, I can keep rambling here, but, uh, yeah, I think, I think that’s spot on.

Matt Mulcock: I think, I think it is such a simple concept, but we admit you, Jake and I are sitting here saying like, this is freaking hard. It’s hard, it’s hard for, from our perspective, and I’m not saying like what was us as advisors, but I’m saying it’s hard for us to help people uncover what they actually want. Right. But you think of like, uh, we read in a relatively recent article we passed around, I think it came from you, Jake, there was a quote in a Morgan House article relatively recent from Christopher Christopher Morley that goes something like The ultimate success in life is living life in your own way. And I, I fully believe that. It will also simultaneously admit that’s really hard because that actually takes you to undercover. What does that even mean for me, like, and again, it takes uncomfortable levels of, not even like extensive levels of work, but it’s uncomfortable work to like actually dig in with you sp your spouse and your partner, or just yourself of being like, why do I want the things that I want? I know we’re getting really philosophical here,

Jake Elm: I know we’re getting, but

Matt Mulcock: This is what we usually where we go, but I do think it’s important to bring up when we talk about stuff like this

Jake Elm: I think there’s societal pressures with this too, like depending on what neighborhood you live in and what all of your friends are doing, and it, I think it’s human nature too to want to be part of the group and do the things that everyone else are doing and what your family’s doing. Or, you know, what I think about Matt sometimes is how much are spending habits would change if Instagram. Didn’t exist. You know, I think about this often just of like, TikTok convinced me to buy this thing, or Instagram convinced me to buy this thing. Or just seeing how other people are living and how much that impacts what we want out of our lives. And I think there was some of that pure pressure too of I want to keep up with the Joneses a little. I want to do the things that other people are doing, even if it’s not exactly. Honestly, I think that it takes some bravery too, and there’s a little bit of, I don’t care what other people think of me. You know, like I don’t care that they, that I don’t care what they think is I’m driving down my. Jetta down the street, you know, they, they’d be like, what is Jake doing?

Um, it takes a little bit of, you know, I don’t care what other people think. I, which is always hard, right. And it’s, it’s just the natural human thing that we do wanna care what other people think and, and things like that there.

Matt Mulcock: Just jogged my memory really quick, Jake. There’s only ever been one time in my life when it comes to cars that I was actually embarrassed. Uh, truly. So, so few, several years ago was working at Fidelity Investments in California and um, I guess, yeah, so there maybe two kind of occasions kind of wrapped up into one, uh, when I was working there. So I was a. Financial consultant there, basically their equivalent on an advisor and it was like suit and tie every day, right? Whole thing. Really expensive area in South Orange County. And one day I got asked to represent our. Our company, our branch, at an event that was being held at the Montage. If you don’t know, the Montage is like one of the nicest hotels in Southern California. In the US They have different, uh, different, locations. So I go to speak at the montage at this to represent Fidelity and uh, I roll up to the valet ’cause they only valet there, and I pull up and I literally roll by a Rolls Royce.

Two Lamborghinis that are just parked right there in the front and like Porsche nine 11, whatever I roll up in. Same thing I inherited from my wife at the time, like a 2006, Kia that had also massive dent in the side. And I, it shook every time it went beyond 60 miles an hour. Uh, I, uh, I roll up, get out in my suit and tie ready to go. They were like, the guy was like, oh, are you here for the event to like, listen? I was like, oh, actually, like I’m, I’m here to, to like speak. And they were like, okay. And then kind of a similar, so kind of within the same timeframe, I, uh, was walking out with my fellow financial consultants. I think we were going to lunch or something, and they were all older than me. Very successful. Been there for a long time. driving a Mercedes, BMW, all these things. And I, I’m walking over to my car and my, this one guy who I used to work with, the same Shane, he’s like, Matt, what are you freaking doing, man? Upgrade your car. And it was like the only, literally those situations were probably the only time in my life that I was slightly embarrassed of like what I drove. And I, that just jogged my memory when you said like, it does take a level of bravery, I think is the word. And I think some level of humility to just be like. I don’t care.

Jake Elm: It’s

Matt Mulcock: This is not what I value.

Jake Elm: It’s a real thing. I’ve felt it before with my dumb Jetta in there. I I, I’ve felt it, it’s a real, it’s a real thing when you know, you’re like, what would people think of me if I’m driving this car? Or like, you, the view is like, how successful can this person really be if they’re driving this type of car, right? Is kind of what people are saying and they, we would get back to, well, success is not measured by what you purchased by, but by your net worth. And again, time on the calendar, what success can be measured in a lot of different ways other than a Mercedes,

Matt Mulcock: Yep. Yep. Well, and one thing, the world we live in now to nowadays, to your point with Instagram, is we live in a world where it is very, very easy to show off how much money you pretend to have. It really is, it’s super, super easy to do that. And I think, the comparison game, the, to your point of like. Our reference groups have just widened to the world. Now. We’re used to be comparing ourselves to our, to our neighbors, and to our reference group. And it’s human nature, by the way. We live in a hierarchical like hierarchical society. So status chasing and all that is I think totally normal. And actually part of our.

Our literal genetic code. That’s how we survived, like in tribes. So I, it’s, I don’t think there’s anything wrong with that. The problem is the environment we live in is we’re no longer comparing ourself to our tribe. We’re comparing ourself to people all over the world, and you don’t even know if it’s real. That’s, that’s the other problem. So, we digress. Jake, any other, uh, I, I guess let’s end with this. Let, I want to, I think because we went philosophical, let’s bring it back to the practical. Let’s maybe summarize some practical things we could give for people to be considering and thinking about within this topic broadly, whether it be with spending with cars, like what things would you say would be some, maybe some key takeaways for people on the practical side of things.

Jake Elm: Overall, I just wanted to just monitor your car payments. It’s a big decision. So if you’re buying a car, don’t just be really flipping ’em outta like, oh yeah, I’ll get this new car. You know, I make a decent amount of money. I’m just gonna go buy this car that everyone else is buying. And that’s fine. I would, I would really dig in and just understand that’s going to have a pretty big impact on your budget and what you can save or do other things. But again, really sweat the big stuff. Like don’t sweat the small sweat, the big things. So I would, I would sweat a car payment, honestly. Um, whenever everybody like really focus in on that. If we’re looking for rules of thumbs. Matt, you can let me know. You think I generally like to use the 5% of gross income rule for transportation is like a good anchoring point.

If you’re out there wondering about how much should I spend on a car, what makes sense for me? Obviously you wanna see how it fits in your budget. If you have a really big housing payment, maybe you have to go under this rule or vice versa. But around 5% of gross income is a good, I think, rule of thumb of what to spend on transportation costs for you.

Matt Mulcock: I’ve always told people five to 8%

Jake Elm: Yeah.

Matt Mulcock: Be on the 8% side. Early on in a career, obviously we talk with dentists. That’s, that’s our audience. So, uh, you could be on the high side of that. If you’re early on in your career and your trajectory is up with income and like, it’s pretty, we, we, we can know within a pretty decent range of where your income’s gonna go over the next 2, 3, 4, 5 years. So you could be on the higher side of that range, but I wouldn’t go above eight to. 10% would be pushing it for me. Of your gross income, uh, for a car payment? I think a 5% rule or like line and varying one or

Jake Elm: Yeah, that’s maybe more of a, yeah, that’s more like, that’s more of my ba hum bug, not a car person.

Matt Mulcock: Yeah. Yeah.

Jake Elm: Yeah. If you wanna go higher, you know, a little bit higher. Yeah. Around that range I think is a good, that can anchor yourself as you’re just looking, you’re thinking about where you’re at. It’s a good anchoring point around there.

Matt Mulcock: Yeah, I think that’s good. Practical advice. Monitor your car payments. I think looking at how that plays into the, the trade offs, like asking the question, what am I giving up? I also think really trying to think about what is my return on. experience with this. Like, what am I, a, and it’s hard. Like that’s also hard to ’cause, you know, I think we’re really bad at knowing how much joy we’re actually gonna get outta this thing. But if you just go off of data, like if you’re trying to make data-driven decisions and you’re looking at what the evidence will show, for most people, things bring less joy than experiences just in general. And I’m not even talking especially over

Jake Elm: Like this is where I’m at with again, we got a Honda Odyssey. I really like it. After a couple of months, it’s just the car.

Matt Mulcock: It’s just a

Jake Elm: You kind of, it’s, it’s shocking. It’s kind of sad and shocking how quickly we adapt to the things that we buy. This advisor, the house, or like cool the toy or whatever we’re getting After a while it’s like, yeah, it’s just a car, right? It, it’s fresh and it has the new car smelling really cool after, you know, for a couple of weeks, but then eventually after your kids throw up and it a few times and throw some french fries around and whatever. It’s just like, you know, it’s just the car, right? And, and the kind of, the newness and some of that value wears off a little bit.

Matt Mulcock: Yeah, yeah, absolutely. Yeah. We’ve talked about this before. The, you know, hedonic adaptation in our brains.

Jake Elm: It’s.

Matt Mulcock: For better or for worse, adapt really, really well, uh, to our surroundings, to our things and to your point, it’s super nice and fun at the, on the lot or you’re driving off the lot, but within a few months it usually does become just a huge expense and a just a car that gets you from point A to point B. So we’ve probably thoroughly offended enough people and gone more philosophical than we intended, but hopefully it’s helpful. Jake, any other final words of of wisdom?

Jake Elm: Um, no.

Matt Mulcock: Monitor car payments. I think just get super intentional. and I think as we’ve mentioned many million times more broadly, practically is get organized, understand like where does this fit into my life with my spending? This is a big part of my spending, but. taking a broader look at just, again, your overall spending and cash flow. This is a good opportunity to, to do that as well. okay. Well, if this was helpful for you and you’re thinking there’s a dentist out there that needs to listen to this, that. Is driving maybe a Lamborghini and, and, and wants to be sha I’m just kidding.

We don’t wanna shame anybody. Uh, but if you think like this is helpful, please share the episode. We want to help as many dentists as we can with our education and, and hopefully this is valuable for you. So we’d love for you to share the episode. If you want to talk to us, we’re happy to, to talk to you, hear your story and help you with the situation. You can go to dentist advisors.com. Click on the yellow book free consultation button for now, Jake, thanks for being here. Sharing your wisdom everyone. Thank you for listening. Till next time, bye-bye.

Keywords: Car ownership, financial implications, budgeting, intentional spending, societal pressures, car payments, vehicle costs, personal finance, financial advice, car buying.

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