Smart Money Moves: Why Buying a New Car Could Derail Your Home Ownership Dreams!

Dated: November 21 2023

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Are You Throwing Away Your Money$$$? The average American wastes tens of thousands of dollars a year!

This is for all you new car enthusiasts and youngsters just starting out! Here's a wise and frugal tip from an older guy who has been through it all: Buying a new car is NOT your best move if you also want to own a home and build wealth! Get this: the average annual cost of owning a new vehicle now hits $12,182, or a HUGE $1,015 monthly. Yep, a serious chunk of change! $1,000 bucks gone every month!

And what do you get from that car? A huge money pit that is a depreciating asset you will lose money on year after year! “But Mr. Ed, I look cool!” If you do, is it worth it?  Now, let's switch gears and talk home buying. Imagine you've got your eyes on a cute $200,000 home, and with an FHA loan, you're only looking at a 5% down payment. That's a manageable $10,000 downpayment. And yes, I can still find you a home for $200k!

This graph illustrates the appreciation of an average $300,000 home over a 15-year period. The graph shows a steady increase in home value, assuming an average annual appreciation rate of about 4%. This trend highlights the potential long-term growth in the value of a home, in contrast to the depreciation of a new car.

Here's the updated graph showing the depreciation of a new car over 15 years, starting with an initial value of $55,000. The graph reflects the trend of decreasing car value over time, with the annual depreciation rate gradually reducing from about 20% to 10%.

Here's an intelligent strategy: Instead of sinking that money into a flashy car (dumb), what if you saved it up (smart)? Trimming down those car costs in half over two years, you could accumulate that $10,000 for your home down payment.

Here is the math - 

Current - $1,500 rent                 New You - $1,400 piti

     $1,015 car          $507 used car

              $2,515                                      $1,907

Using the above simple example, you save $600, which could go towards repairs if and when needed or saving.  Imagine now you own your home, your own rules, your own space. And the most significant thing is you currently own an asset that gains value over time. Home values appreciate historically 4% annually.  All it takes is some simple saving. So, hold off on that new car purchase and start dreaming of your perfect home! With the $600 a month saving, you can buy a new gaming system your first month, and in a quick 20 years, you will have humnders of thousands of dollars in equity in your house!! If you have any questions, DM me on any of the social media sites or text 912-844-9000.

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Team Yannett

Since he was 16 years old when his father explained to him how real estate worked with mortgages and leverage, Ed was hooked! Real Estate owners 40X more net-worth! His energy, enthusiasm, and tenacit....

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