[Music] We have a question from Stephanie next. She says, You always mention the 238 rule for buying a car, but then also mention that cash is always the best option. Can you explain how much would be too much cash for a car? Should it be a percentage of our total income? Are there any guardrails to that? Well, it's really one of those things. Well, cars, and what's funny is we had somebody come in and tour the studio before we even hit record today, and we had a whole conversation on Teslas. And I said the statement, and I say it all the time on the show, is that too many Americans are driving around in their wealth, and that's the big risk that you have. I think it's more of a financial order of operations question, is that 238 is supposed to be your lifeline, meaning somebody's throwing you a life preserver out in the water that you need good reliable transportation to get to your first wealth-building tool, which is a job, and it's supposed to be a

very affordable car. I'm thinking we need to be thinking Corolla, not the Land Cruiser. As I've said a gazillion times, it's because this is reliable transportation, not something to impress your neighbors, your friends, and your relatives. So, there, if you get to the point that you're in Step eight, meaning you've funded all of your financial goals, you've got the cash reserves all set up, you've been saving and investing 25% for a number of years, your path, you even know your number, you know if you're ahead of the curve, behind the curve, or right where you need to be, and you're clearly way ahead of the curve, and you get to Step eight, and you say, Hey, I'd like to have a nicer car. I'm not going to judge you for that because you did everything else you're supposed to, and you didn't, you know, shortchange your financial and your future self. And that's the big thing that I think people skip, is that when I see a 26-year-old go out and buy the

BMW. I know that they actually just stole from their future self. I even in millionaire Mission. I do an entire section on the timing of big purchases and I use the case study of what happens when the typical Corvette purchaser buys a Corvette, which is like early 60s, versus if somebody in their 20s tried to buy a Corvette and what that means to their worth and their what the car payments or what the cost of it would be and the opportunity cost. And you see it's night and day. So just make sure you make those big decisions at the right time. Yeah, every financial decision, every financial decision we make has an opportunity cost associated with it. If I spend this, then I'm not going to save this. If I buy this thing, I'm not going to buy this thing. Automobiles are no different. You said it so wonderfully, Brian, that if you're working through the financial order of operations, here's what you're not doing. You're not saying, Hey, you know what? I listen to the guys

They say I got to pay cash for a car. I'm going to save up all of, I'm going to save, you know, 20% of my income for the next three years. I'm going to build it up in cash. I'm gonna go pay cash for the car. Well, when you do that, what you're actually doing is you are sacrificing your future well-being. Even though you didn't go borrow money, even though you didn't go out and finance that automobile, that car was costly because what you did is instead of putting your money to work, having it work for you, you bought a short-term consumable, depreciable good. So, how much car too much? I don't think we can define that for you because there are some folks who really don't need to spend more than $20,000 on a car, and there are some folks who can freely spend $200,000 on a car. You have to understand where you are in your financial journey, and you have to define, If I make this decision, what sacrifice am I making for the future?

Is that an acceptable sacrifice that, based on my station in life, I'm comfortable making with this car purchase? Yeah, another thing while we're talking about cars. Like, if you put 40,000 miles a year on your car 'cause you're a salesperson or you know your car is your office, don't go buy a super expensive car because you're basically, that is a consumable that you're going to use every ounce of its value very quickly, and it's going to get crushed. I'm always amazed at people who want to drive a European luxury car 45,000 miles a year and watch the value just nose-dive. I'm like, why didn't they go buy an affordable Toyota or Honda, put a gazillion miles, they get 200,000 miles because the maintenance kills you on those decisions as well. So, so pay attention to how you're using things in your life as well because, and then I have neighbors, and I love them to death, but they tell me I'm doing things all

wrong and I just chuckle internally because they flip their cars every two to three years 'cause they talked to me about these luxury cars and I'm like, Yeah, but that car, if you go look at consumer reports, that car is horrible unreliability. And they're like, Well, I'm not going to own it for more than three years. And like that, You're never going to own the car game. The secret to owning cars, you got to own them past eight years. I'd prefer for you to own cars past ten years. And that's the thing that I think a lot of people when they drive around their wealth, they're doing it all wrong. And I just sit there, I get quiet when we're having those conversations amongst my neighbors 'cause they don't really want to know the answer.

How Much Cash Is Too Much for a Car Purchase?

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