The Rachel Cruze Show - Is Your Car Busting Your Budget?

Episode Date: September 16, 2019

Wondering why you can’t get ahead? Look in your driveway! Over the past decade, car debt has gone up 60%, and the average car payment is now $554!  I don’t want car loans to steal from your future! In the latest episode of The Rachel Cruze Show, you’ll learn: Why financing a car is the worst financial decision you can make How to pay off your current car and pay cash for your next one How to save real money on car repairs—a mechanic shares his secrets Resources (everything mentioned in this episode): Zander Insurance ELP Show Notes Page    Learn more about your ad choices. Visit megaphone.fm/adchoices

I've got a new survey just for you, my podcast listeners, and I would love your feedback. I want to know what you want to hear more of in future episodes of the podcast. All you have to do is text the word podcast to 33789. You'll get a link to the survey, and if you complete it, you could win some really cool prizes, so make sure to check it out and text the word podcast again to 33789. Paid off $192,362. What was like the number one sacrificial move you had to make? We have one car.

All the secrets on how to save money on car repairs. A lot of people think that oil changes, they can do them at home and save money. At the time you buy the oil, you dispose of the oil. You're really not any further ahead. Hey, guys, welcome to another episode of the Rachel Cruz Show podcast. I am so glad that you're here. And today's episode, we're going to talk all about your car. That's rights.

Because let's be honest, cars are expensive. And the normal way of thinking is that you just go get a car. loan because there's no way that you can save money to pay cash for a car. In fact, 44% of Americans carry a car loan. The average car payment in America today is $545 a month. Oh, my gosh. But here's the deal. It's costing you even more than that. So in this episode, I'm going to tell you the truth about car loans, share some inspiring stories of people like you paying off their car loans. I'm going to talk to a couple whose car made a big difference in paying off their house, and I'm going to visit a mechanic who will give us all the secrets to actually saving money on car repairs.

But first, let's talk about one of the biggest ways to put money back in your pocket. Look, I get it. Cars are a status symbol in our world today. People look at your car and just assume they know everything about you, and you might see someone drive like this really nice car, and you just assume that they have a lot of money. But the truth is, most people do not own their cars. No, they are paying the bank, not themselves. And in my personal, humble, wise opinion, a car loan is honestly probably the dumbest type of death that you can get into.

Because look, just look at the math. You're taking out a loan and paying interest on something that is going down in value. So, mathematically speaking, this is not smart. So let's just look at the reality of car payments today, okay? There's a lot of numbers, but stay with me. The average card payment is $545 over 69 months. So almost six years of paying $545 every single month. I just keep thinking about how many pairs of shoes I could buy without much money, you guys. I mean, it's insane.

And then on top of that, your car loses 25% of its value the instant you drive it off the lot if you buy a brand new car. Now, here's where the math really gets you. The average total car loan is $31,722. Now, by the time you finally pay off that car six years later, you've actually paid $37,605 in car payments. Now on something that's worth $10,000. Yes, because your car goes down in value over those six years. So when you look at it, it's just, it's crazy.

Now, on the other hand, what would it look like if you paid cash for a car and you invested that car payment instead of paying it to the bank. So if you invested $545 a month with the average annual rate of return of 10 to 12% in about 30 years, you would have $1.4 million. Yeah, I hope you like the car. That is insane. Over a million dollars. That is what your car payments are costing you.

So do not cripple your future with a car payment. You can pay for a car in cash. do it every single day. And guess who's about to do it? That's right. Baby number three, we're changing cars. I'm about to buy a car that I don't think I've ever been this excited, you guys, because I've had a change of hearts. For so long, I said I would never drive this type of car. I said, no, no, no, I'm going to be cool mom. I'm not going to drive this certain type of car. Now, pregnant, two kids later, lifting that dang car seat up in an SUV for four years. I thought, to heck with that, bring on the minivan.

That's right, the cruises are getting a minivan. So excited. Can I just tell you, when we knew we wanted to upgrade cars, I wanted bucket seats, like I had the things in my head that I wanted, and Winston was like, hey, we should look at a minivan. I was like, no, Winston. We're so much cooler than a minivan. No.

So then I go online and I build out this, like, cool suburban. Okay, well, that costs basically the price of a house after I finished it all. online, and I was like, oh my gosh, that's so expensive. I was like, well, I'm going to just go on Toyota.com and look up the Sienna and just build one online. I started building this thing, you guys. I had no idea that minivans were this amazing. I mean, I knew like the automatic doors, but even like the cup holders, you could turn on warm or cold depending on your, on your drink. I mean, all of the sunroofs that you can have, all of the DVD players, I mean, there's a vacuum, a vacuum. a vacuum built into the van.

I mean, I was absolutely sold. And then the price of this minivan that I built online was a third of the dang suburban. I was like, I can buy three of these amazing minivans for one suburban. I thought, babe, we are a minivan family. So we're about to go test drive and we're about to go buy my dream car. And I'm so excited. I really am at minivans. They're just amazing.

And here's the deal. I said, this kind of got me over the hump of the main. minivan purchase is I was like, this is my five-year car. When baby boy turns five and he goes to kindergarten, mom was going back to an SUV. But for five years, for five years, I get to press a button and my doors open. Bring it on. Bring it on minivan. So excited. And you better believe it, yes, we are paying cash for the minivan. Now, if you're out there and you're going car shopping just like we are and you don't want to get a lemon, make sure to click the link in the show notes for our used car checklist to make sure you get a great use car. Because, listen, saving up for car, it takes time.

I get it. I know. We're doing it. But you can do this. I promise. And if you still don't believe me that car payments are just, you know, it's just a way of life. Listen, if you do not believe that you cannot pay cash for a car, here are a couple of stories of people just like you from my Facebook community that paid off all of their car loans. And it's amazing. Lydia said, yes, we paid off two car loans 18 months early and no longer have car payments. Now we can use that money to tackle our last two chunks of debts, and then we will be debt-free. I can't imagine how awesome that will feel because even just having our cars paid off is super rewarding.

Megan said the Dave Ramsey plan has given us the cup of reality that we needed to hear after we got married, and I love it. Maybe I can't splurge and go shopping or eat out, but it's worth it. we see the debt fly out the window. I love it. See, guys, they're doing it. You can do it. And just think about how much money that they're going to have back in their pockets now that they do not have a car payment. I mean, how amazing would that be if that was you? Now, another way to put money back in your pocket is to use one of our endorsed local providers. Okay, these are independent agents who shop current rates on all types of insurance for you.

And ones that you might be overspending in, like car insurance. Finding an ELP, can save you $700 in 12 minutes. So make sure to click the link in the show notes to start saving today. All right, coming up next, I'm trading in my heels for a pair of flats and heading to the mechanic. That's right. He's going to give us all the secrets on how to save money on car repairs. So this was a really fun segment to shoot. We actually did it in a mechanic shop, like an actual garage. So you'll hear the audio a little different here on the podcast, but it's still great information and can't wait for you to hear it. All right, so there are some surprising ways that you can save money when you are doing repairs on your car. So I brought an expert mechanic, Cody, here, and we are here at your shop, Cody.

Thanks for letting us barge in. Absolutely. I know. It was so fun. Okay. So there's really five main places you can fix your car. The dealership, the mechanic, the tire store, an auto repair shop, and your house. Yeah.

So I want to walk through each of these going from the most expensive, which we all know is the dealership. I don't know much about cars, Cody, so you're going to, like, teach me a lot. Yeah, let's do. But I do know the dealership is the most expensive. So why would you need to take your car to the dealership? I would say anytime you've got a, something that's within the manufacturer's recommended warranty period, you know, sometimes that's 36,000 miles to 60,000 miles. You know, or if there's some type of a safety recall, you know, that's oftentimes those repairs are free, no, you know, no charge of the customers. Yeah, yeah, yeah, yeah, because dealerships really are, they're expensive, right?

We'll go to take it there. Yes. I want to avoid that if you can. Yeah. Next would be a mechanic. Right. Where you're actually going to get it, like yourself, a professional to help fix your car. So when would you for sure want to go to a mechanic?

Everybody's range of what they feel comfortable with is different. Yeah. You know, oil changes. A lot of people think that oil changes can be, you know, they can do them at home and save money. Yeah. By the time you buy the oil, you dispose of the oil, you're really not any further ahead. Because the average oil change is like 35. Yeah.

You know, sometimes you'll find a special $29.99 or $19.99. Totally. So you may save $5 here or there, but the hassle will just have something to do it without all the tools. It's great. Okay. Okay. Like electrical issues and stuff. Electrical stuff, check engine light, you know, issues, you know, where it takes some specific diagnostic equipment and knowledge is, you know, might need a mechanic. Okay, perfect. Okay. Next kind of step down from that, I guess it's like a tire store, right? So you can go to a tire store, obviously get new tires there. But they'll actually do other services for you for free. sometimes, right? Right. A lot of tire stores take care of, like slow leaks, you know, a nail in a tire or something like that. Most of your big chain tire stores do free rotation balance,

you know, for the lifetime of your tires. So. Okay. How often do I get my tires rotated? Recommend it is, say, every other oil change, like, you know, 6,000 miles to 8, 10,000 miles, something like that. Okay. Take advantage of it. Yeah, that's so good. So good. Okay. And then auto parts stores, which are kind of even separate. Right. Like advanced, auto parts, all that. I see those around. So why would you go to somewhere like that? Again, they do a lot of free services too, like testing batteries, alternators, starters, and they will actually install batteries for free. Oh, seriously? A lot of light bulbs, they'll install for free, stuff like that. So would you recommend like a light bulb? That's a great example.

Like go buy it at the auto parts store. They'll sell it to you. A lot of times they'll install it and everything. Yeah, so nice. Okay. All the tiers, you guys, have ways to save money. You don't have to just take it to the dealership. Like, think through it all. Right. And last but not least, the cheapest way is your home. Things you can do at home. Yeah. I'm fascinated by this, Cody. So you've got to teach me.

So what are things that you can do at home? I mean, again, it's whatever you feel comfortable with. Yes. You know, watch some videos online. And if you feel like tackling it, then as long as you've got the tools and just make sure you use a jack and jack stand, you know, and you're working safely around your car if you're getting underneath it. Yeah, for sure.

Okay, some of the two things my husband is like huge on. He changed our oil for a while. And then the convenience aspect, he was like, oh, I'm just going to take it in. Because literally, I think I'm saving five bucks. That was like Winston. Right. But changing our air filter and our windshield wipers, cruises, we do this at home. I cannot attest that I do this, Cody.

He does. But those are two great things to do at home, would you say? Oh, yeah, for sure. Okay. And again, you might want to teach a child. A child that's never been exposed to working on something. They may enjoy changing the oil. I know.

Okay, so an air filter. All right. So I'm going to interrupt right here because on the child. the video version, you're actually seeing him change the wipers and the air filters, like you're seeing what's happening. And of course, you can check that out on YouTube and Facebook, the video version of the Rachel Cruz show. But I wanted to leave it here in the podcast because I still think it's helpful. So here you go. So changing air filters are pretty easy. Pretty straightforward. This one is really easy to get to. Everyone's going to be different.

You know, look, your owner's manual usually tells in there exactly where it's at. What I usually do, the easiest way. Put it up to like the sun. If you can see light through it, it's okay. It's still fine. If you can't see light through it, it should be replaced. How often should you replace it? Every 15, 20,000 miles maybe. Or as it gets dirty. You can just like order off Amazon or get an R-Parts store. You can get it on Amazon. Just make sure you order the right one. Local parts store. Okay. Amazon's a little cheaper. That's it. It just slides right in. So nice. Easy enough. Okay. And then windshield wipers. Easy one to fix. So this one, everyone is different.

Again, read the directions, watch a video online, but this one just pops up. Obviously, be careful lifting that up. This thing is spring loaded. If you let it go, you've got to replace your windshield. It'll shatter that really easy. So it just pops out. Slugs back in. It's like a little lever.

Yeah. And that's cost what? If you did that at home. I mean, if you did it at home, the wipers are, you can get them online probably for five or six bucks a piece. Yeah, versus a dealership. Right. A dealership would probably charge 20 or 30 bucks a piece for each wiper.

Come on, guys. So good. Cody, you're awesome. Thanks for showing us how to save money with our cars. We can all do it. So thanks. Absolutely. Wasn't Cody so helpful? Seriously, I love his tips and tricks when it comes to cars. I mean, just so great. Now, one of the best ways your money can work for you is making sure that you have term life insurance. Term life insurance is really inexpensive, and you can secure your family's future for a fraction of what it takes to get whole life insurance. and actually half the population thinks that term life insurance costs three times more than it actually does. It is something that will take care of your family, unlike that $500 a month car loan. Now, Winston and I use and trust Zander insurance.

Zander makes things super easy. They walk with you through every step of the process, shop all the top carriers to find you the best rates, and make sure you're getting exactly what you need for your family. They will give you a huge peace of mind for such a small amount of money. To find out for yourself, go to zander.com and get a quote today. All right, coming up next is a great story of Carrie and Joey, and you guys are going to love them. Their story's incredible because they paid off their house. Yes.

Now, I wanted their story in this episode because they made a huge sacrifice when it came to their cars. And this helped them pay off their house. So they're just incredibly inspiring. And I hope when you hear their story, you think, man, That could be me one day because I think we all want to be like Carrie and Joey. So here's their story. So catch me up a little bit, kind of walk through. Why are you here in Nashville?

And, yeah, what brings you here? Well, we are here for our debt-free scream. And we made a vacation out of it since we're here. Nice. But, yeah, we have worked for four years to pay off our house. And we paid off $192,362. You guys. That's insane.

Okay. So how long have you guys been married? Six years this week. Six years this week, the anniversary. Okay, and you have two girls. I met them already. So sweet. And they're like the exact same ages of my girls, which is just so fun.

Okay, so it's crazy that you're like 29, right? 30. And you have a paid for house. So like what even makes you get in the mindset to do this? Because a lot of people that are in debt think it's hopeless, right? They think like, oh yeah, you're just always going to live with debt. It is what it is. And especially a mortgage.

Like that is the one type of debt I don't yell at you for. So. But the fact that you paid it off this young, like, what made you even want to do that? Like, why not take that money and go on vacation? You know, I'm in sales, and so my job's pretty volatile when it comes to if I miss my number, I may lose my job. So if I don't have any expenses at all, it just makes going to work easier. And I don't feel desperate in my conversations when I need that commission check. And then, you know, our relationship gets a lot stronger because we don't have anything to pay for,

except for the lights and food. It's amazing. So who was like the kick, who like kicked this off? Like who had the idea? Let's pay off her house. I think it was her. Was it?

It was a common goal. It really was. We were both on the same page. Right when we got married, before we even had a house, we went to Financial Peace University. Yes, yes. Just in our local neighborhood.

Some guy put it on. So we did that. Yeah. And I think that maybe made us want to say, you know, when we do get a house, let's just pay it off as fast as we can. So I think it was a common goal, and it was right in the beginning of our marriage.

So a lot of our marriage was just built upon that. Yes. Okay, so I'm curious, tactically, how did you go about this? Because a lot of people are going to hear, like, okay, you paid for your house. So, like, did you write, like, just big checks randomly throughout the year? Did you have, like, a tracker, and you were, like, you know, progress payments? Like, how tactically did you do this? Yeah, so we would sit down.

How much can we do each month? compared to our annual salaries, and we first started with, you know, a certain amount. And then in about six months through it, we're like, we could probably double that. And so we doubled it. But now it's on automatic draft. And it's coming out. And then two years went through and we're like, we could probably double that again. So we just like...

Because your income's going up during this time. So you're having more cash flow in. You're like, let's just throw it. Let's not live on it. Was it hard to make that decision? You know, I wouldn't say it was like... hard because it was really motivating, especially to see the amount of interest we were paying each month. That just going down and down and down. It's like, oh, at first, you know, you're paying

several hundred dollars, maybe even $1,000. Even just like the 15th or the 30 year difference. Yeah. So it was like, okay, if we pay, you know, if you'd get a commission check, say $10,000 commission check, we already predetermined. It was going to the principal. And you'd be like, wow, look how much it took down the amount of interest that you're paying every month. Yes. So it was really motivating. But yes, we still have been on vacation. We just did it really frugally. So what was the, what was like the number one sacrificial move you had to make where you were like, okay, we have one car. Our car. One car. We've had one car, our whole marriage. So how does that work? Well, it's always worked out where, you know, when we were both working full time, it was close to each other. So we would just commute. Yep. He would drop me off. I did longer shifts than him. So he'd drop me off and then pick me up.

When we had kids, he would take the tracks. Yeah, our public transit, every job I've ever had has been literally right to the front door from our house. Okay, so I'm going to interrupt here, you guys. I mean a one car family. How weird is that? But here's the deal. If you want to get out of debt and you want to be different with your money than the world, you're going to be a little weird. Now, they obviously had a great setup that they had mass transportation, like right to his work.

but even before that, they said that they carpooled together. And so here's the deal. You're going to have to make sacrifices to get ahead financially. That's probably going to happen. That's in the cards for majority of you as you're getting out of debt. So for you guys, it may be that you go down to a one car family. Maybe it's that you sell your car and you get, you know, I'm going to say the word crappy. Don't get mad at me, people, but like a crappy car for a little while.

I mean, whatever it is, maybe your car can be the big sacrifice because it's something that we hang on to for so long because we think, oh, well, we have to have two cars. I have to have to have to have to. No, you don't. You really, really don't. So the deeper you're willing to sacrifice, the faster you're going to see progress. And again, the one car family thing that may be in the cards for you, it may not be. Maybe you sacrifice in other areas. But remember, the more you choose to sacrifice, the faster you're going to get through this process. And I love that they did it. I mean, a one car family, how weird is that? And I say that with the best compliment mind. So is the car going to be a purchase you'll make?

We all do two cars, not the house that paid off? We need a family car. Yes. Because we have a little car. Yes. We need a big family car. Yes. Oh, you guys. Okay, so how does it feel?

Like, when you write that last check for your mortgage, which you're like in like the 0.001% of the world, right? That's America that pays off their house. Like, how does that feel when that last check is, or it was, you know, taken out, right? Auto draft. Like, what do you think? Like, how does that feel? What's that conversation like?

First time, I didn't even know how to do it. So I had to, like, research. How do you pay your house? There's not a lot of, like, research. Yeah, you don't just pay it. You have to, like, pay a fee to close your mortgage out. Like, we didn't know any of that. But when we finally had the, the, I think you have to do it through a wire,

when the wire came out and we opened our phones and it was like, paid and full. We were like. Yeah, we kept, like, opening the app. Like, this is real? Yeah. Pay and full. Okay, the next day. But paid and full, still paid and full.

A little surreal. What, it's been since May. Yeah. So good, because it's the opposite feeling you have when you are deep in debt, right? And a lot of people that are that feeling of living paycheck to paycheck. And if they lose their job, their whole world turns upside down. Like, they don't have a plan. And so for those people that are in that position, like, what would you tell them,

words of encouragement to say, like, you know, that you can do it as possible? What would you tell another couple, another 30-year-old couple who's sitting here? and they may have credit card debt and car payments and the mortgage they can't even imagine. But what would you tell them? Well, I think obviously Dave's plan works. The hard part is actually doing it. And then just don't buy stuff. Like, stop buying stuff.

We buy too much stuff. It's like we buy a box that we live in and then we feel the box with stuff. And then when you buy another box, it's like, why do we buy all this stuff? You know, it's worth it. And it might seem like so long from now. like even thinking about four years from now, that seems like such a long time, but it just flies by. And the motivation keeps you going. It's not just a, oh, four years from now, I'll be fun, you know, then we'll be fine. It's no, like next month, you're going to feel a little bit better.

And the following month, you're going to feel even better. Like, it's just going to keep snowballing and motivating you and making you feel more peace as you go. It's not an end. It's a journey. So good, you guys. Well said. Oh, well, congratulations. Congratulations. I'm so, I'm ecstatic for you guys. Unbelievable. You guys are incredible. I mean, you did, but some people would say is the impossible. And that's it, like you said. I mean, you're just determined. You stick to it. And you have a plan and you can execute it if you do it. So congratulations, you guys. Thanks for being on. You guys, I feel so inspired. And I hope you do too. My hope is that you see that it is possible to live life without a car payment and how this one decision could literally change. change your life. Right. Thanks again to Cody for coming on and sharing his expertise and Carrie and Joey for their story. So inspiring. Thank you guys so much for listening in on this episode. And if you haven't subscribed to the podcast yet, make sure you do that. And if the spirit leads,

you can leave a review. And if you actually want to see this episode, check out the video version on YouTube and Facebook. And as always, be sure to take control of your money and create a life you love. So if you guys enjoyed this podcast, we have more from the Ramsey Network, like The Ken Coleman Show. According to a recent Gallup poll, nearly 70% of Americans are disengaged at work. If you dread going into work every Monday morning and you're just trying to make it to the weekend, the Ken Coleman Show is for you. Everyone has a sweet spot. Your sweet spot is at the intersection of your greatest talent and greatest passion. We will help you discover what it is you were born to do and then we'll help you create a plan to make your dream job a reality.

You matter and you have what it takes. Join the conversation on the Ken Coleman Show. To hear full episodes, just search Ken Coleman wherever you listen to podcasts or go to Ken Coleman Show.com.