the author here thinks he has the formula for buying a car in your effort to get wealthy
https://www.iwillteachyoutoberich.com/blog/find-out-how-much-car-you-can-afford-with-20-40-10-rule/
I wonder if he actually investigated how wealthy people choose their cars or just filled a few pages in his book with gibberish
The man is just another in a very long list of BS artists.
Thereâs an old axiom I like: âif you want to become a self-made millionaire, take advice only from a self-made millionaireâ.
I know nothing about the guy, but this particular piece of advice doesnât look too bad:
"The 20/4/10 is a good example of one. It can help you get solid starting numbers to help your car buying decisions.
Hereâs how it works:
â˘20% down payment on the car.
â˘4-year car loan or less.
â˘10% or less of your gross monthly income goes towards car expenses including gas, insurance, DMV fees, repairs, parking/speeding tickets, and interest payments."
I think a lot of folks would save themselves from financial problems if they followed this, instead of buying the most expensive car the dealer will let them finance for 7 years (or more!).
There is no magic formula. I do like that he emphasizes paying attention to the numbers, but claiming he has a magic answer makes him just another BS artist in my mind.
Most of the time I think the most popular âget rich quickâ scheme is selling âget rich quickâ tools to fools who think they can learn some secret and hang out with Warren Buffet.
spend no more than $417 a month (10% of your income) on expenses for it.
I really like that one. I spend $100 a month on gas (and from the looks of it, thatâs gonna skyrocket soon). On his budget thatâd leave me $317 a month for maintenance and car payments, which means Iâm already over budget if I get a $20,000 car on a $6k downpayment.
So Iâve gotta get one that costs significantly less than that if I want to factor in tires, oil changes, etc. and thatâs assuming that on 50 grand a year I can actually afford to devote 10% of my pretax income to a car, which is doubtful because Iâm probably paying significantly more than the recommended 1/3rd of my income on housing.
In short: His advice is great if youâve already got money in which case you probably donât need his advice. If you donât, then you canât really follow it.
You can follow it - buy a cheaper/used car, or save more for a down payment.
Does anyone have a problem with the actual advice?
Yeah. Me. Itâs easy to say âsave more/buy cheaper,â but when you have no car, and you need a car to get to work, and work will fire you if your car breaks down, you might not have that option. If you factor in all the maintenance/tires/tabs/insurance, youâre probably talking something closer to 10-13k, and there arenât a whole lot of new cars available for that.
But used cars in that price range are probably old enough that they donât qualify for a standard vehicle loan which means if you canât find a co-signer then you canât get them unless itâs at a buy-here-pay-here lot, which is its own morass of financial pitfalls.
The bottom line is that thereâs a large segment of society that canât follow the standard âdevote X amount of your income to Y so that you can put money into savings!â without making significant sacrifices such as choosing between being hungry or being naked. The one-size-fits-all advice like you see in all of these âbe rich on only upper-middle-poor incomes!â books and sites simply doesnât fit all because those who can follow it probably have enough money that they donât particularly need to worry about it.
On the other hand, lots of folks take on too much debt buying cars they canât really afford. If this advice wakes some of them up to the âno, I donât need a $35,000 car with 84 months of paymentsâ idea, thatâs great.
And are you talking about folks buying new cars? I donât put them in the âchoosing between hungry or being nakedâ category.
No argument there. Apparently eight year car loans are now not unusual. I still think a 5 year loan borders on insanity.
For certain income levels, buying a cheap new car is the only option if you need a loan and canât find a co-signer, because banks wonât loan you the cash for a used car that you can both afford and which will be reliable enough to not get you fired by breaking down. Thatâs totally stupid, I agree, but itâs another example of how itâs more expensive to be poor.
The formula reminds me of Dave Ramseyâs schemes that have made him wealthy. And selling his schemes in books and at large seminars is what made him wealthy not using his schemes. There arenât any Ford Granadas left and a $2,000 beater of any variety would likely be a weekend hobby to get it safe and dependable.I have 2 old trucks that are running like new at the moment and actually rarely fail but if one does I have a backup to use until it is convenient to repair the other. I have less than $5,000 in them all together but even that is an astronomical amount to a great many people.
I was interested in the article as I have long been critical of the automobile industry selling US more than many need or can afford and doing so fills the used car market with high end cars that are expensive to own and maintain.And Ford has no interest in bringing back the Granada no matter how much business Dave Ramsey can send them.
Maybe when I was younger I would have been quick to finance a real Z-28 but luckily GMAC wasnât as generous 50 years ago. Today I wouldnât want to watch a nice high performance car fading away in the driveway while costing $300 each month for insurance and payments of ~$800 each month that might out live me.
Most of the advice seems reasonable. The 20/4/10 rule is easy to remember and use. For people that might overspend without something to show them how to spend less, it can be a good thing. I really loved that CT6, but I found an Accord EX-L that cost 40% of what the CT6 cost, and it ticked most of my boxes. I couldnât justify spending the $65,000 on the CT6 since my car is a commuter for 5 more years. The guy was just suggesting that people practice money management.
The new Accord has been reviewed very favorably, with some reviews asking âwhy spend more?â.
I bought a 2017 last August, but thatâs exactly what I thought.
The article must have been written a long time ago if there is such a thing as a â20,000 dollar luxury carâ.
Unless he considers a Civic or Cobalt a luxury vehicle.
Personally, I think his friend who spends 3 to 4 grand a month on shoes is a card carrying moron no matter how much she makes. That money would be better off in investments just in case her high paying gravy train abruptly ended.
Perhaps one way to get rich is to write a book telling other people how to get rich and pay to get it published.
Once itâs published, you can rent conference rooms and charge people $100/seat to attend your seminar by a âpublished author and expertâ (expert is anybody who wrote a book). Advertise it properly and you should make a profit. Once you get a few hundred people to attend your seminars, you can say âhundreds of people have attended his seminarsâ.
Oh, by the way, my commission is 15%. 
Yeah I have some issues with Dave Ramsey but realize he has done a lot to get people out of the hole they dug for themselves. I used to teach the Boy Scout Personal Management course and my formula for getting rich was to always spend less than you make. Works every time, regardless of your income. Not always easy but it works.
Of course then we got into good debt and bad debt. You donât necessarily want to wait 30 years to buy a house when you have the cash. And I donât recommend selling your car and buying a $1000 one like Ramsey suggests. One of the execs at work had never owed any money and remembered only one time he was down to a couple dollars as a young person. He rented his house for years and at about 65 his landlady wanted to dump the house and he was wondering if he should buy it or not. I donât think Iâd recommend his life style to anyone but in this great country we all do as we please.
There is a new Accord sedan on display at a local mall, and the Monroney sticker on the window reveals that this 4-cylinder vehicle has a list price of $34k. Why not spend less?
Turbo 4 is now âtop of the lineâ for many cars. And you can get a lower line Accord for less. Reviewers were comparing the top Accord to MB and BMWâŚ
The one thing many people can do to make their money stretch further is learn how to use tools to do all sorts of simple maintenance themselves. Not just cars, everything. Drippy faucets, jammed vacuum cleaners, change your own oil or air filters. There are so many things people toss, and waste money on that require really simple maintenance. And there are thousands of tutorials online that show you how to fix stuff.