Pro-tip #61: Read this article.
Why do so many people obsess over the T-word?
Starts with T, rhymes with slacks, like what your dad wears.
Look, I’m not saying a focus on it isn’t unimportant. On the contrary, but don’t borrow to buy dumb things like cars because you heard salary packaging clowns claim it’s a good thing because you will pay less of it. That’s dumb.
If someone is selling something, and selling it hard, do you think it’s more of an advantage to you or the one who is selling it? I know it depends, but at least do the maths.
Golden rule – the best place for your money is with you, preferably invested somewhere safe, like your mortgage or lending or whatever successfully proven predilection you may have.
So, following this, when your colleague or promoter or whatever is suggesting you buy a car with a novated lease, the first thing you do after running away is read the fine print, and add up the total cost of the loss in value, fees and charges and interest.
You do, don’t you? Thought so.
Surprise! A whole heap of your money has just gone from your hands to someone else.
The picture gets worse when you realise that you’re jumping into the finance-industrial complex which supports the purchase of new shiny things, not you sleeping soundly – and the car you’ve bought is now worth a whole lot less than what you’ve paid.
Trust me on this – and I sell car loans – for the vast majority, buying new is a fool’s game. If you’re loaded, buy new and run it into the ground, fair play.
If you enjoy watching your money gurgle down the toilet, that’s cool too.
But if you’re intelligent and need some wheels, buy second hand, buy smart and pay with folding stuff.
Cars are a money pit.
I just bought a gorgeous shiny white thing with a cream interior (I never said I was perfect) for $20k less than what it was advertised 13-months ago with only 10,000 more kms on the clock and paid in the proper way.
For the seller, he lost 40% of his money in less than 18-months. In theory, I could park that saving in my mortgage and get a guaranteed 6.2% return on it.
Actually, that’s exactly what happened.
Please, if anyone can convince me that buying a new or expensive (i.e. more than $60k) car is smart, I want to hear from you so I can run away from you, too.
Keep your money where it belongs. Avoid schemes, avoid borrowing. Buy smart. Think profit. Think long term and do future-maths (working out the total cost of the asset over the ownership period).
Losing money in any way should make your skin crawl. It does mine.
In saying all this, I know better than anyone that we don’t always have the cash available for a replacement car when the need arrives, and it usually arrives suddenly.
If you do ever need a car or personal loan or any other type of finance for that matter, remember to contact my office first. We couldn’t make it easier – go here to book a 10-minute call, I’ll do a quick assessment and we go from there.
Cheers,
Brodie Brown
BH Brown Mortgage Brokers