The Personal Finance Podcast - How You Can Have a Free Car for Life (It's True!)

Episode Date: December 2, 2020

Episode 30: How You Can Have a Free Car for Life (It's True!) In this episode we cover:  How to use assets to buy a car The danger of car buying  How to buy a car right  Why cars can limit your freedom if you don’t buy them right  The system of buying a car for free Free Car for Life Article! Stuff I Recommend!  M1 Finance Best Place to Invest  Personal Capital Free Wealth Management and Budget App  CIT BANK (Best Savings Account) ** Some links may be affiliate link and we earn a small commission at no extra cost to you. We only recommend products we truly believe in.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Find your advisor at IG Private Wealth.com. On this episode of the personal finance podcast, we're going to talk about how you can have a free car for life. What's up, everybody, and welcome to the personal finance podcast. I'm your host, Andrew, founder of dollar after dollar.com. And today on the podcast, we're going to be talking about how you can have a free car for life. Because if you know anything about personal finance, you know that buying a car is one of the worst investments that you can make. because a car is a depreciating asset. So what that means is it goes down in value over time.

Where things that are assets, when you buy an asset, it's going to increase in value over time. So you can think of an asset as something like a stock, a bond, a rental property, things like that. Those increase in value over time. But when you purchase a car, specifically a brand new car, you're purchasing a depreciating asset. What that means is it goes down over time.

And so car buying becomes extremely important within your personal finances. is one of the big three expenses. Transportation is one of the biggest expenses overall, and it's very expensive to own a car. First of all, you're going to have a car payment, and your car payment may carry an interest rate. You have to carry car insurance,

which becomes a significant expense over time. And then finally, you have to have repairs and maintenance. You have to put gas in the car, and all of these things add up as part of something that does not increase in value. And so really, cars don't make a lot of sense when it comes to personal finance if you look at it on paper,

because if you look at all these costs, the average American is spending well over $1,000 on their cars, on their vehicles. And this is going to really cut into the amount that you can save and you can invest over time to build wealth. But your boy has got you back. Because what I'm trying to do is I'm going to show you a few hacks on how you can reduce these costs for liabilities, for things that decrease in value. And this hack you can actually use for any type of liability. And I'm going to show you exactly how it works. But specifically, one of the best ways to use.

use this strategy and use this system is for car buying because you can use one set of capital and buy cars for the rest of your life. And I'm going to show you exactly how this works. And then once I show you how it works and I show you the system on how you can implement it as well, then I'm going to show you a bunch of reasons on why I love this strategy and how you can expand this strategy to other liabilities. So let's get into how you can have a free car for life. So how can you have a free car for life? This sounds like clickbait to me. It's probably what you're saying in the back of your head. And I know that's what it sounds like. But I'm going to show you this really cool strategy. And after you see how this works, you're going to say,

hey, that was pretty simple. I think I can actually do that. And the whole baseline of this strategy is just to reduce your costs going towards an appreciating asset. And everyone knows that a depreciating asset is never a good thing to purchase. So let's take, for example, you buy a brand spanking new BMW for $45,000. Those first few weeks that you own that BMW, you're going to be on Cloud 9. Maybe you're riding around town, blast and balling, you show off the logo to all your friends, you posted on social media, and you're feeling amazing about yourself about this new car. But what always happens is there's diminishing returns when you buy a car. So over time, you're going to start getting these car payments coming in.

And that brand new BMW looks a little less enticing after you've had a $600 car payment for six months in a row. And at the same time, you're just not getting the same amount of value as you once did at the very beginning. This happens to people all the time. Then you take it in to get your first oil change and you realize, oh shoot, an oil change in a BMW is $500 a year. And all these things start to add up that you didn't realize. And that's the problem that happens is most people bite off more car than they can chew.

They bite off a payment more than they can actually take on. And the same person who bought that same BMW, say they buy it one to two years used, is buying it for $25,000 instead of $45,000. So that's what I'm showing you about the depreciating asset. It depreciated $20,000 within the first two years. And this is extremely common, specifically with luxury cars, but with a significant number of different types of cars. They take a massive value hit even when you drive the car right off the lot. The second you drive that car off the lot, it's already gone down in value.

And that's why buying cars is a significant financial decision because a person can buy that same BMW one to two years later for $20,000 less. As you know, we talk about compound interest all the first. a time. $20,000 over the course of 30 years is going to be six figures. And so you're buying a car for six figure differential just because you wanted it brand new. You just lost $20,000 on a kid pushing machine with a fancy logo. That's basically what it comes down to. So that's why we always say that buying cars is for suckers. But this system is going to show you why and how that you can loophole this. Because even a child can understand that if you hand someone $45,000 and two years later they

hand you back $25,000, that's not a good decision. That's not a good idea to make that purchasing decision. And if cars are your thing, that's great because this system is perfect for you. Because what the system actually does is it opens up the possibility for you to have more car buying opportunities. You can buy more cars more frequently with this system. And here's how the system works because it's extremely simple. What if instead of buying liabilities with your hard-earned money, you took that hard-earned money and purchase an asset. Let me explain to you what I mean. So let's say, for example, that you want a truck. And you see a truck that you want a year or two old, and it's $25,000. And so it's like a $350 month payment. You could buy the truck and make those

payments for five years, just like the rest of the world. But you don't want to be just like the rest of the world. That's what the personal finance is here to do is to show you ways that you can improve your financial situation significantly in a different way than everybody else is doing it. So instead what you do is you go look for a house that you can purchase and you can rent out to a tenant. And you go and you find a three bedroom, two bathroom house in a decent neighborhood. And after all your expenses, so your taxes, your mortgage payments, your savings for repairs, your savings for capital expenditures, all these other expenses that come into play, after you calculate all those numbers, you figure the house will bring in $350 a month in cash flow. So $350 a month

will come in in cash flow. Now you buy that property and say you put down 20% and you have a $350 a month cash flow coming in. That $350 a month you utilize to purchase the car. Now you're paying $350 a month on the truck. Look at this. Your house is paying for your truck. But here's the beautiful thing about this strategy because over time your house is going to continuously be paying for the truck with the cash flow. That cash flow is going to be paying for your car payment. And once the car payment is up, you're still going to be making $350 a month. Whereas if you spent the same amount of money to put down on your car, all of a sudden that money is gone. But you will forever be making $350 a month or more because that number will go up over time, as we know, rents increase over time and you'll be able

to continuously buy cars or just make that income of $350 a month. This is a way for you to not lose the principle that you put down on a car and not to lose the money that you're putting down every single month on your car payment. This is a way for you to have assets pay for your liabilities. And this is how you want to run your personal finances. This is how you want to run your life. You want to get as many assets as possible to pay for your liabilities. And this is the huge hack because you're spending the same amount of money putting it down on a house versus putting it down in a car, but you're keeping all of that money throughout time. So this is a way for you to keep the money that you put down, eliminate the money suck that liabilities are, and be able to

continuously buy more liabilities if you want to through that asset. Just think about this for a second. Somebody else is going to wake up every day. They're going to go to work. They're going to drive through traffic, deal with their bosses, come home just to pay you rent so that you can continuously pay for your truck. And that's how this works. That's how. this system works. And this is the way that true wealth builders build wealth, is they buy assets to pay for their liabilities. So if you've never thought about this strategy before, you may be thinking through your head, well, how much do I have to put down? Or I don't know the first thing about buying a rental property. And we've got a couple of episodes where we've already talked

about buying rental properties. And I'm going to show you how to run the numbers on a future episode. So make sure you're subscribed so that you can learn how to run the numbers on a rental property. So let's get into the five reasons why I love this strategy. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy. Clothes don't fit anymore and routines are changing. And it just hits you. Life is expanding.

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that house is producing the cash flow for you to be able to purchase cars. But let's look at this for a second. Because what if you did it with a house hack? And if you don't know what a house hack is, it's when you have a multi-unit residential property, and you live in one unit, and then you rent out the other unit. And what this allows you to do is, significantly reduce your housing expense and or you may even have a free housing expense because

sometimes the rent covers your mortgage on that property and you're living for free. But what if you did it with a house hack? Because the power of a house hack is, if this is your first property that you're buying, you can use an FHA loan. And what an FHA loan is is you can put 3.5% down on that property and be able to live in that property. So let's think about this for a second. You buy a $100,000 house.

All you have to put down is $3,000. $300. You find a tenant for the second unit. That tenant pays you rent. And now you are paying for a car with the cash flow when you only put down $3,500. For the rest of your life, you're going to be able to pay for a car.

That's the power of this strategy. That's the power of this hack. Because now you're minimizing the amount that you're putting down in a car because transportation takes up so much of your money that it's going to significantly increase the amount that you can invest, that you can put away for your future,

that you can put aside for emergencies in case they come up. this is how you build wealth, is being able to do this. Finding these loopholes and doing this and putting it into action. But having that one set of capital and being able to only have to ever spend that one set of capital for your cars is extremely powerful. Number two, your assets are paying for your liability. Something that goes up in value over time is paying for the things that go down in value over time. It's a simple math equation, but it's extremely powerful because over time that asset's going to go up. So it's going to go up with inflation because the price of cars will go up, but it's going to go up more than the price of inflation.

Because as we know, real estate overtime goes up significantly more than inflation. So you don't have to jeopardize your family's financial future just because you like shiny things. If you love cars, this is perfect for you. Guess why? It allows you to pursue that interest, pursue the thing that you love, and be able to make it a good financial decision. Which leads me into the number three because you can buy cars more frequently. I truly believe the best way to buy cars is to buy slightly used cars, drive them for a long period of time, and just kind of run them into the ground. But if cars are your thing, this strategy

is perfect, because you can buy a new car every time the loan is up. You can be buying a new car every couple of years when the loan is up. If you have a high cash flowing property, you could buy cars frequently over and over again. When you sell that car, guess what? Somebody else paid for it. So that cash is coming into the bank. And maybe every three cars that you sell, you buy another rental property. Now you have two of them. Now you can buy two cars at the same time if you're a car person. And this starts to compound over time. And that's why this is so cool and this is such a powerful strategy. Or if you love the car, you don't have to sell it. You can keep it for a long period of time and just collect the cash flow. Let the cash flow pay for all the rest of

your liabilities, for your insurance, for your gas, for your repairs, things like that. Or put it towards another liability until you need a new car. And as you can see, as you get more of these properties and as you buy rental properties or other assets, this begins to compound. And you're covering expenses over time. And this is how you can retire. Because as you cover each expense, you check off the box, you have one less thing you have to work for. There's one less thing you have to drive in traffic, go deal with your boss, come home, because you're covering it with those assets. And that's the power of having an asset. The fourth reason I love this strategy is, like I just said, this does not have to be for only cars. You want a boat? Go get yourself a boat,

but buy a house that pays for the boat because boats are depreciating assets. You want a motorcycle? fine that'd be great but go buy yourself a portfolio of investments that pay for that motorcycle want to learjet and fly across the country all the time buy a bunch of apartment complexes that'll pay for that lear jet see this can this can scale this can go this can get bigger and bigger over time if you want it to but it's all up to you and how you want to work this system because having enough capital to just put down the down payment to save up for a house to put a down payment down so that you can rent it out and build wealth over time is going to make a massive difference in the long run for you financially. And the fifth reason why I love this strategy is because

other assets work as well. So you can do this with dividend stocks. You can do this with index funds. You can do this with anything you want to. You may just have to put more capital down than you would with real estate. That's why I love the real estate part of it so much because real estate has leverage. And what you can do with that leverage if you do it carefully is you can put a minimum down payment it down, still ensure that you're cash flowing, bringing in enough cash every single month to pay for your monthly payments, and cover up those liabilities that you have to purchase. But that's why real estate works so well, because banks are willing to lend you money on real estate. They're not willing to lend you money on stocks. They're not willing to lend you money on bonds, but they will

lend you money on real estate. And so you can use that in your favor to be able to buy these assets that will pay for your liabilities, pay for your living expenses, pay for your food, pay for your family shelter. You can do this with all kinds of different things. And what this strategy does is it comes down to getting what you want out of life. If you want something in life, finding the right way to do it can make all the difference in the world. Because doing this strategy over and over and over again is going to save you well over six figures over time. And if you buy a lot of cars or you buy expensive cars, it's going to save you well over a million dollars. Because you're investing that money instead of paying down on liabilities.

And over time, what you're going to see is all of a sudden you have more money because now you're not paying $350 a month towards that car payment. So now you have another $350 a month coming in that you can start investing into more property. And at this rate, you're looking at a strategy that could allow you to get one house a year. And you can figure out a number, how many houses do I need to retire? Maybe you need 15 houses to retire because you need $7,000 a month. And once you got to 15 houses, you figured out the cash flow in your area would allow you to retire. Then all you had to do was manage the manager that's managing those rental properties. And this is a strategy that can allow you to do this. And this is the first step to getting there.

cover one expense with a rental property. If you can cover one expense with a rental property, you can cover all the expenses with other rental properties over time. But you have to implement this strategy the right way and reduce your liability cost. So this is the amazing power of assets. It's the amazing power that you have with your personal finances. But the choice is up to you and what you want out of life. What do you want to do in life? Do you want to continuously run the rat race, continuously just running in place, going to work every single day, doing things the way everybody else does it, or you want to be a little bit different and build tremendous wealth over time because of it. The choice is up to you. Thank you guys so much for listening. And if

this is your first time listening, consider subscribing so you never miss an episode. And share this episode with a friend. And don't forget to leave a rating and review on iTunes as well, because our goal is to bring as much value to you as possible. And we're trying to spread this message that money can buy freedom. That's what money is there to do, is to buy more freedom. So thank you again so much for listening and I hope you have a great day. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play.

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