I get into the hidden costs of car payments and their long-term financial impact. Using a hypothetical scenario, I illustrate how a large car payment can significantly diminish potential investment returns over a 40-year period. For example, purchasing a $30,000 car with a $15,000 down payment results in monthly payments of $296, which over five years totals $21,148, and leads to a lost opportunity cost of $225,793 in investments. I break down various car purchase prices, from $30,000 to $80,000, showing the substantial financial consequences of each choice. The analysis includes interest rates, monthly payments, and the impact on retirement accounts and other investments. To wrap up, I emphasize the importance of making informed decisions about car purchases, considering their long-term financial implications. Tune in to understand why big car payments, especially early in life, can be a million-dollar mistake.

Key Takeaways:

• High car payments significantly reduce potential investment returns, with a $30,000 car purchase potentially costing more than $225,000 in lost investment growth over 40 years.

• Prioritizing investments in retirement accounts and diversified portfolios over car payments can lead to significantly better financial outcomes in the long run.

• Making informed car purchase decisions by considering interest rates, total loan payments, and long-term financial repercussions can help avoid costly financial mistakes.

• Considering other transportation options can set you up for success later in life, ensuring you make the most of your 401(k) and Roth IRA accounts.

Key Timestamps:

(00:00) Introduction: What Your Car Payment is Really Costing You

(00:39) Breaking Down the Numbers

(01:29) The Long-Term Financial Impact

(01:48) Real Life Examples

(03:24) The Million Dollar Mistake

(04:20) Making Informed Decisions

(05:18) Final Thoughts

(05:33) Outro and Additional Resources

Key Topics Discussed:

Erik Baskin, Baskin Financial Planning, BLUF, Bottom Line Up Front, The BLUF Finance Podcast, Military Money Manual, veteran finances, car loans, auto loans, car payments, debt, opportunity cost

Mentions:

https://www.nerdwallet.com/

More of Baskin Financial Planning:

Download the Ultimate Military Finance Checklist⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, with 7 pages of critical things to be thinking about to clarify your journey to financial freedom.

Think you might need some financial help? ⁠⁠⁠⁠⁠Book an intro call with me to see if we would be a mutual fit.

Questions or comments, drop me a note at: erik@baskinfp.com

www.baskinfp.com/post/47