CAN YOU AFFORD IT? (Car Edition!) #Best Education Page #Online Earning

how's it going today guys so today we're

going to be talking about whether or not

you can afford either the car you're

currently driving or a car that you may

be looking at because I know that you or

I'm guessing that you if you're a young

person watching this video you have a

dream car in mind and I'm sure there's

someone out there who will extend you a

line of credit and allow you to buy that

car but is that a good decision

in most cases absolutely not now I went

through this myself I bought a car that

was not super expensive

but I ended up losing about ten thousand

dollars on a car in the course of one

year due to depreciation and I made the

wonderful decision of driving two cars

at once because why have one car when

you can have two that was my whole

mindset it was a huge financial mistake

cost me about ten thousand dollars so I

kind of want to give you guys an idea of

what kind of car payment you can afford

based on your income all right and

there's a very practical model I want to

teach you and it's not one that I

created myself it came from interest.com

I'll link them up in the description as

a source that way you guys can check

that out

but they have something called the 2410

rule of buying a car and we're going to

talk more about that and how that would

work in your situation and how you can

crunch the numbers on this but so we're

gonna kind of figure out what you could

afford for a car and we're gonna look at

the average numbers out there and get an

idea of can the average person afford

the average car payment so the average

car payment out there I believe it's 503

dollars last time I checked but we're

gonna use 500 dollars a month as easy

numbers sake that's the average car

payment $500 per month now the average

salary on the other hand is forty-four

thousand one hundred forty-eight dollars

per year all right so could the average

person earning the average salary of

forty four thousand one hundred

forty-eight afford a $500 a month car

payment so in order to answer this

question we're gonna look at this 2410

rule and I'm gonna explain it to you

guys right now I highly recommend you

guys go to that site and bookmark this

or possibly write this down somewhere

else for reference that way you guys can

look back to this if number one you're

looking to buy a car or a number two

maybe a friend of yours is looking to

buy a car and he asked you for your

advice point them towards the 2410 rule

of buying a car number one the 20 stands

for a min

of a 20% down payment on the car itself

so if you can't afford 20% down in that

car then you can't afford that car

number 2 4 is a maximum of a 4-year term

on that loan now you can go out there

you can get a 5-year term you can get a

six-year term on your loan but your best

bet is to stick to 4 years because if

you can't pay it off in 4 years then you

probably are buying more car than you

can afford

now that 10 stands for 10% so the total

vehicle cost and I'm not just talking

about the monthly payment I'm also

talking about the insurance on that car

and maybe you're gonna get all let's say

a car wash membership because I have a

car wash membership it's like 30 bucks a

month any of those expenses that are

relevant or related to your car that's

what counts as your total vehicle cost

so that $500 a month is just for the car

payment you have to add on the insurance

cost for that car and maybe you're

somebody who has a car wash membership

that all factors in to your total

vehicle cost and that should be less

than or equal to 10 percent of your

gross monthly income now that means your

pre-tax monthly income so just to

refresh guys 20% down minimum four year

term maximum on that loan and no more

than ten percent of your gross monthly

income is the 2410 rule of car buying

and I highly recommend that you guys

follow this rule yourself to avoid

buying a car that you just can't afford

and being stuck with a car payment and

ending up with no money because you're

dumping all of your money into a

depreciating asset known as a vehicle

all right so let's go ahead and go over

an example of this just to give you guys

an idea let's say you have a thirty

thousand dollar car so first of all we

know we need to put 20% down minimum

let's say we're gonna do that we put six

thousand dollars down which is our 20%

and we're gonna get a four year loan on

this car because four year is the

maximum term for a loan on a car

following this rule so $24,000 at three

percent interest for four years gives

you a car payment of 531 per month that

would be your payment on that car and

that's probably higher than what you

guys are used to looking at because most

people factor in a five or six year term

loan so how much money would you need to

be making to afford this car so first of

all the 531 is just

payment we also have to factor in car

insurance and I'm gonna say 100 dollars

a month is your insurance and that may

be low so you probably know what the

insurance is on the car you're driving

now so if you guys are doing the numbers

yourself just use your own number but

understand that the more expensive a car

is in most cases it's going to be more

expensive to insure that car so let's

say it's a hundred dollars a month to

insure it and this person doesn't have

anything extra like a carwash membership

or something like that their total

vehicle cost is 631 a month all right

now following the 2410 rule that your

total vehicle cost can be no more than

10% of your gross monthly income so if

we multiply that by 10 that means you

need six thousand three hundred ten

dollars a month of gross income or

pre-tax income in order to afford that

twenty four thousand dollar car so it's

at well $30,000 car with six thousand

down so a twenty four thousand dollar

loan so what does I equal out to per

year that is seventy five thousand seven

hundred twenty dollars is would need to

be your salary in order to afford this

car payment all right so let's think

about this for a minute okay we just set

up here that the average car payment is

five hundred dollars a month while the

average salary is only forty four

thousand one hundred forty eight dollars

per year this is not much more expensive

especially when you think about the fact

that when you add on a hundred dollars

for insurance the average vehicle cost

is probably around six hundred dollars

or more depending on your insurance and

we know that the average salaries forty

four thousand one hundred forty eight

and that is a far cry from seventy five

thousand seven hundred twenty which is

the amount you would need to

realistically afford that car payment

all right so what that tells us is most

people out there are buying much more

car than they can reasonably afford and

as a result they're dumping all kinds of

money into this car and it becomes a

money pit and they have no money left

over at the end of the month because

they're putting five or six bills into

their car now I want to go through a

chart that I made just to give you guys

a reference all right so over here it

would be your salary or what you make

per year and that is your car payments

so if you guys are looking at a car and

this is your total vehicle expenses

remember so you have to include both

your insurance and your car payment and

any other expenses which would factor in

to your total vehicle cost so if your

total vehicle cost was $200 per month

you would need to make $24,000 a year to

afford that for $300 a month you would

need 36,000 for $400 a month you would

need $48,000 of salary okay so we said

right here the average salary is about

44,000 148 dollars a year that means the

average person out there could

realistically afford a car payment

between 300 and $400 a month of your

total vehicle expenses so insurance plus

the car payment actually all right so

this is the problem we have of people

spending way too much money on a car

going forward let's say you want a $500

total vehicle cost you need to make

60,000 for $600 you need to make seventy

two thousand four seven hundred dollars

you need eighty four thousand dollars of

gross income per year for $800 you would

need 96 thousand for $900 you need 108

thousand and if you wanted a one

thousand dollar total vehicle cost you

would need to have a salary of $120,000

a year to realistically afford that car

anyways guys that is all I got for this

video if you know someone who's about to

buy a car please send them this video so

they can have their eyes open to this

and hopefully not buy too much car if

you enjoyed this video please drop a

like if you're new to my channel please

consider subscribing to be notified of

any future uploads and as always I thank

you for taking the time to watch this

video

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