so in this video I’m gonna share one of the largest most prominent wealth killers in America this is something that can totally hinder your ability to create wealth over your lifetime and from the outside it may not appear as though it is but it’s something that I truly believe is something that can totally hold people back from actually creating wealth and creating a better financial future for themselves and that’s our primary goal on this channel helping people build wealth save money make more money and creating a better financial future so if you’re new here to the channel make sure you hit the subscribe button drop a like and let’s just get started with this now from the outside as I said it might not appear as if it’s one of the largest wealth killers but it truly is and that is cars now cars and vehicles cost so much more than they may appear so from the outside you look at and you say okay the average a car payment for a new vehicle in America is about five hundred forty five dollars per month now five hundred forty five dollars per month may be a lot of money to some and may not be a lot of money to others but simply put look this is not just the amount of money that you might be paying for it there’s there’s other costs that are involved and what I would argue to be one of the most important costs you need to consider that so many people leave out is something called opportunity cost see the opportunity cost between putting 545 dollars into something that totally depreciates versus taking that money and putting it into something that appreciates in value is going to make a massive difference this can quite literally make the difference between becoming a millionaire and being broke for the rest of your life and I’m gonna explain that to you in this video so stay tuned now so one of the most important rules for building wealth is to avoid putting money into something that rusts rots or it appreciates now cars do all three and so if you can avoid spending as much money as what the average American spends on a new vehicle per year which is about eight thousand eight hundred and forty nine dollars per year is the average cost of owning and operating a new vehicle in America I’ll leave all the different statistics down below as to where I got these different numbers from but eight thousand eight hundred forty nine dollars for a new vehicle in the first year that’s a lot of money going into a vehicle and and it’s not just that as I mentioned the opportunity cost behind this is so much a greater imagine if you took this money so you’re paying 545 dollars per month for your car payment so you took this money instead of having that large of a car payment you could shave off $300,000 payment because you use some of the different tips I’m going to show you in this video later on and you took that money and put it into something that appreciates in value instead of depreciating appreciates in value at say 7% per year maybe it’s stocks maybe it’s a real estate maybe it’s CDs you wouldn’t get 7% of the CDs but something that’s appreciating in value or at least maintaining its value versus something that’s depreciating now you run those numbers over 20 or 30 or 40 years and you could quite literally have well over a million dollars just based off of the amount of money that you’re saving from your car payment and putting it into something that is gaining value over your lifetime so it’s very simple but it’s something that so many people aren’t taking advantage of so when breaking down the cost of actually owning and operating a vehicle if you look at this eight thousand eight hundred forty nine dollars a large percentage of this is made up and Jesus from depreciation about 40 percent is made up simply from depreciation of that vehicle now when you buy a car new instantly as soon as you drive it off the lot you lose about 10% of that car’s value give or take depends on the make and model of the vehicle but about 10% of that car’s value instantly lost as soon as you drive it off of the car lot for a new car now in the first five years of owning and operating a vehicle so the first five years of that car’s lifetime it loses for 37 percent of its total value so your car is worth 63 percent of what it once was five years ago so if you run the numbers on that you say you bought a car for $30,000 five years later the car’s value would be roughly about eighteen thousand nine hundred dollars give or take a little bit but about eighteen thousand nine hundred dollars so you lost about over eleven thousand dollars in total value from your car and just from owning it for five years so something that totally is losing value every year and this is the case are about ninety-eight percent of cars the only ones that would really will possibly see appreciation are classic cars or cars that possibly have something interesting about them that are very rare and people want to collect them but in most cases just about all cases cars lose value so about 1400 to 1600 dollars per year is the average cost of car insurance in America then we have other vehicle expenses we have maintenance we have new tires you want to get something fixed on your you want to change the fluids in your vehicle you have to pay for registration taxes so many fees involved with this that can add up so quickly with the vehicle and most people think that they need a vehicle and I’ll be honest I of a vehicle and I think I need it myself right it’s it’s hard to argue that you wouldn’t need a car especially in America we don’t have as good of public transportation as some countries in Europe might have but I want to give you some different ways that you can actually save money on this so you can take this money and put it in something that appreciates in value instead of depreciates in value such as a vehicle so I’m gonna give five different ways you can save money on this and one of the first ones is simply by not buying new vehicles if you’re buying a new vehicle you can run the numbers over and over and over again and buying a new vehicle is almost always going to be worse financially for you in the long run than buying a slightly used vehicle so once you get through those first initial few years of that hard depreciation that double-digit a percentage of depreciation of that vehicle and then you would find yourself maybe possibly wanting to buy that vehicle so anywhere between three and seven years could be a prime time to actually buy a car because it lost some of that depreciation very quickly and now it’s slowing down a little bit in terms of how fast is actually depreciating in value so that’s one option now another option is to simply do some routine maintenance on your vehicle one of the best ways to do this is to just understand how your vehicle works I’m still dumbfounded on the amount of people who just view a car as a magical box and and they get into it no idea how an engine works no no idea of the concept of you even combustion or anything that’s going on within their vehicle what’s making the tire spin so if you can just take some time literally just take thirty minutes out of your day at some point in the future watch some youtube videos about cars about how to change oil about how to maintain your vehicle about how to change a tire and this can save you thousands of dollars over the next few years of being able to maintain some of the basic things behind your vehicle now if you have a serious problem to vehicle you should probably take it to a mechanic I don’t want somebody trying to fix their brake lines and messing that up and hurting themselves right so another tip is to drive more efficiently now what I mean by this is you see a lot of people who will slam on the gas will go fifteen feet and then slam on the brakes and then as soon as the other car ahead of it moves just ever so slightly they hit the gas hard move up a little bit and then slam on the brakes and then vice and you just go back and forth and this actually is not very efficient at all so if you want to be more efficient with your vehicle just make some smarter decisions when you’re taking turns go slower because you know you got to slow down for the turn so when you’re approaching the turn you just kind of let off the gas a little bit there’s it’s pretty easy to be efficient you know when you’re not being efficient with your vehicle and you’re eating up a lot of gas in your car but on top of that it’s going to be safer as well cars can be quite dangerous so you’re gonna be safer by just driving smarter and it helps the environment by saving gas so I think it’s like a triple win there and by just driving slower and more efficiently as a person as a good driver on the road I just thought that was important to mention on there one other thing you consider doing with a car is you wanna think about the interest rate for what you might be paying for a vehicle now maybe you’re buying a used vehicle and you don’t have enough cash to actually buy the car so a lot of people take out a loan on this but I would consider not taking out a loan if it’s going to be something that is a high interest rate so if you don’t have a good credit score you might end up having to pay a large interest rate for your vehicle and me personally I don’t like to pay interest rates over six or seven percent because I know I can almost always get a higher return on investment by putting money in somewhere else and then paying off that interest rate in another way so if you are faced with an interest rate of 10 percent for an auto loan or over ten percent somewhere in the double digits I would consider just trying to buy that car in cash save up as much as you can make it an effort to do that because you’re gonna be paying interest on something that is depreciating and you’re paying interest it’s a double whammy not a good look and definitely not something you want to get caught up in and a lot of people do so consider buying that car in cash unless you’re faced with something like a three or four percent interest rate you have tremendous credit score you’re doing very well and they give you a great deal on it then you could actually consider taking advantage of that instead of paying those high interest rates so that’s one and then the final one and people might get mad at this but I want you to just think about it for a little bit look I know that I personally have a car and I feel as though I always need a car but I’ve met some people who have gotten rid of their vehicles and they’ve had so much more money coming and that they now have to expend to other things and a lot of them will put it into investments and this is so smart to do this but I want you to after this video think about how often you use your car and a lot of people say no I can’t get rid of my car because I have to drive to work or I have to go grocery shopping or I have to pick up my kids from soccer practice so there’s a lot of reasons as to why you may may need a vehicle but I also see families with three vehicles or four vehicles and if you need all those vehicles I’m not quite sure and you want to ask yourself that as well so do really an audit of your current car situation and how often you’re using them I was talking to this woman out in California a few weeks ago and she told she would tell me how she totally got rid of her car where she thought that she needed it and there’s actually kind of the basis of this video this is why I created this video because of this conversation I had with her but she said you know what there were so many things in my life where I thought I just needed this car I thought that I had to go grocery shopping and she said her solution she just orders food online from Amazon now so there’s a lot of different things you can do behind that or you think oh maybe I have to drive to the airport I have to go fly somewhere so how else am I gonna get to the airport I’m 20 miles away so she takes an uber right so it can end up saving you a lot of money that five hundred forty five dollars per month for a new car payment plus all those other fees can literally be close to a thousand dollars per month almost about six or seven hundred dollars per month in total well what if you took a few Ebers per month it’s still gonna be cheaper by doing that so do an audit of yourself figure out whether or not you actually need all of your vehicles and how often you’re using them and if you’re not using them of $500 worth of value or more then consider and getting rid of it it’s a tough decision it’s something you have to make on your own and it’s something that I don’t know I think that maybe you should just consider it but that’s why we create these videos we try to help people I just think a little bit deeper about the financial decisions that they may be making in their life because I would love to see people retire earlier and create a better financial future for themselves so if you enjoyed this video drop a like subscribe to the channel if you haven’t done so already thanks for watching and I’ll see everybody next time