Speaker 1: Welcome to another edition of the Chicks on the Right podcast.
We're talking to Zach Abraham from Bulwar Capital Management, our
financial guru and sponsor of the show. All Right, today,
we're talking about cars, Zach, So, first off, the twenty
thousand dollars car has effectively died, like it's gone, It's
disappeared from the market. The average price of a new
car in the United States has officially crossed fifty grand
for the first time ever. A new car prices rose
two point one percent from August and three point six
percent year of a year, which is the steepest jump
in two years. And I think that's probably driven by
tariffs and price your evs and luxury models dominating the
market and whatnot. But you are the financial guru, right
and is it safe to say that cars are legit
the financial bane of our existence? Because they are for me,
at least for me, because I want to get your
take on like stuff like buying versus leasing and should
be people by new or used. I know what I do,
but I'm just curious as a financial advisor, what do
you think of all this? And cars? How much do
they suck? Now on.
Speaker 2: It's horrible?
Speaker 3: While you were talking about this, though, I couldn't help
but to think back to my family.
Speaker 2: I remember.
Speaker 3: They wanted to My dad really wanted a Toyota land Cruiser,
and I remember we had a Toyota land Cruiser in
nineteen Yeah, they were awesome in nineteen ninety four. But
the reason we waited a good year year and a
half or so because to spend over thirty thousand dollars
on a car was, to quote my father, unconscionable, right,
And I think he ended.
Speaker 2: Up spending like thirty two grand. That was insane.
Speaker 3: You know.
Speaker 2: Now a suburban's one hundred, right, are you yea more?
Speaker 1: It's like an escalade like escalades and then like you
look at what's that? The g wagon? Oh yeah, my
daughter will be like, did you see that g wagon?
I'm like, yeah, they're like one hundred and thirty thousand,
ridiculous or.
Speaker 3: Higher depending on how they're outfitted. I mean you can
get them as high as three hundred grand.
Speaker 2: Inane. Like that's insane, it really is.
Speaker 3: And it makes me cringe because look, if you have
enough money to where you can go out and pay
cash for a car like that, and you don't notice
the cash being gone, meaning it makes no discernible difference.
That's one thing, right, you know, whatever, that's that's totally
we're not.
Speaker 1: Talking about those people. We're talking about like your regular
person that's saving for retirement. And like I mean, if
somebody comes to you and they say, Okay, I've got
to pay for my kids college, I got to pay
for retirement, I got to pay for my bills every
single Like, would you say leasing is a good idea?
Financing is a good idea? Would you say used? Would
you say new? What would your recommendation be for people
five years old?
Speaker 3: Japanese made used cars, right, really used, one hundred percent used?
Get it with sixty to eighty six tee to one
hundred thousand miles on it. Look, I should probably spend
some time developing a ratio for this, but I would
say that anybody that does not make four hundred thousand
dollars or above, you probably should never have more than
fifty percent of your annual salary sitting in your garage
right right, And that's probably not.
Speaker 2: The right ratio, but I do know that that would
be a good rule of thumb.
Speaker 3: And you see why they do it, right, Like, you
know you're driving around this brand new car or whatever,
and you got this eight hundred dollars to one thousand
dollars payment on it, and you're looking at going. You
would get the exact same experience had you bought that
same car five years old with fifty thousand miles on it,
and you would have saved fifty percent. Right. And the
reason you don't is to impress people that you don't
really like and that have I have absolutely nothing to
do with your financial well being.
Speaker 1: Right right, and I don't really like you. So what
do you care?
Speaker 2: Right? Well, they don't like you. Here's the other thing.
Speaker 3: A younger you know, well, you got to spend money
to make money, right, You got to You got to
look successful before you are successful. Okay, I built a
firm driving a two thousand and one Ford Focused four
door Hatchback with one hundred and eight two hundred thousand
miles on it. It's nonsense. You don't need to spend money.
Speaker 2: To make money.
Speaker 1: Like Sam Walton. Didn't he have a pickup truck?
Speaker 2: Yeah he did.
Speaker 1: It was a gajillionaire.
Speaker 2: Yeah. Here's the other thing I'll tell people too.
Speaker 3: They're if I'm talking, if I'm looking at entrepreneurs or
I'm looking at you know, people starting a company or
whatever the case may be. And let's say they're looking
for investment, and if I see them driving really expensive cars,
it concerns me. And not because not for moral reasons
every but it concerns me as far as where is
their attention, right, what are.
Speaker 2: They focused on?
Speaker 3: Because when you're really focused on being successful or winning
or being driven, right, a lot of that other stuff
just gets in your way. Right, It's like this unneeded detail.
And you know, when I sit there look at the
guy who's got the decked out car, and it looks
like he's coordinated his clothes with his car colors and
his watch on the you know, I sit there and
I think there's a guy that has either way too
much time on his hands, right, or his really lost
focus of what's important. And so I think that cars
are an incredible waste of money. And I think the
best thing to do, like you said, what is it
is unquestionably the best thing to do is by Honda
Toyota and buy them. Like I said, somewhere in that
three to six year old used you know, to where
you're getting at thirty at least thirty to forty percent
off the original sticker price and put as much down
as you possibly can.
Speaker 2: And that's that's the right thing to do. Drive them
till the wheels fall off.
Speaker 1: Okay, So then are you liking me? Because that's great advice?
Are you like me? Where you see like you get
on social media and you see these people who are
buying their brand new sixteen year olds, like brand new
BMW's and like right, and they're like, look, I just
we just got Susy a brand new twenty twenty five
decked out like BMW And I'm like that or is
this as humble?
Speaker 2: What is this? What are you doing? What? And the
crazy part to me is too a lot of them
are making payments on it, right, which is just crazy
to me.
Speaker 1: Yeah, it's like and then what do they have to
aspire to? Because I got to tell you, I my
very first car was like a nineteen eighty Toyota Corolla
piece of shit with no radio in it. I had
to put a boom box in the front seat, which
is probably a safety hazard. I don't even know, but
it's like it. But I just remember, like you have
if you have a piece of car that you know,
sometimes it was so bad that I think we had
to like push it to get it to start. You know,
just pieces of crap because they make you want to like,
they aspire you to get better, to do better, buy
your better car. In the long run, I just I
can't imagine my parents buying me a brand new anything
when I was six hours.
Speaker 3: Yeah, well, my if my daughter wants to imagine it,
she can go ahead and do that, because that's about
as close as she's going to get to it. But yeah,
to Matchers, I had an eighty six g Cherokee. Now
I I I would hesitate to call it a pos
I've got a lot of affection for it. But funny enough,
you'd be driving down the road and it was kind
of it was kind of a joke we did. I'd
pull the keys out and just throw them to somebody
in the car, right because you could pull the keys
in and out and then and then we'd be at
an intersection and the cars would pull up behind you,
and if I pushed the rear window washer fluid, they
shot the washer fluid directly out the back and so
it was like it was like urinating on the hood
of the.
Speaker 2: Car behind US, and so we had we had a
we had a we had a blast with that, right,
I mean that's really different.
Speaker 1: I mean I know that it was different back then,
Like everything about the world was different. Safety is different.
I mean I get it, you want your kids to
be safe and everything, but there was something to be
said for those crappy first cars.
Speaker 2: You know. Yeah, well, hey go, let's go right back
to what I was just saying. Right, super ru is
a really safe car.
Speaker 3: That's a Japanese car, right, So, so once again talking
about the Japanese made you know, like I said, three
to six year old used, those are great, safe, fuel efficient,
awesome cars. I just, you know what's funny because I
think the point that you make, that you bring up
is actually one that.
Speaker 2: I don't think a lot of people focus on.
Speaker 3: And honestly, I think it's probably the biggest point to
me if I think about it, other than not being
spoiled and not being bad people, you're also not doing
the kid a favor because I you know, I re
simply well, no, what is this year and a half ago?
Speaker 2: Two years ago I got my first like nice car,
it was still used.
Speaker 3: I can't bring myself to broke band new, but it
was like a year and a half old with sixteen
thousand miles on it.
Speaker 2: Yeah. I still get tickled getting in that thing every day.
Speaker 3: But the reason why is because I drove that Jeep
and I drove that two thousand and one fourteen.
Speaker 1: You wait, you waited to get it. Yeah, yes, you
worked so hard. Yes, and it wasn't handed to you
in that car.
Speaker 2: Yeah exactly.
Speaker 3: And then also when I finally purchased that car, I
didn't walk out five days after purchasing it and seeing
it sit there and going no, I've got to make
that car payment. That's the other thing too, right, these
car payments that people like. You know, if you can
get a good deal of a good financing package, you know,
that's fine, I understand.
Speaker 2: But the goal should be to try to pay for
the car. Cast you don't want to finance, you're appreciating asset.
Speaker 1: Then you're are you against leasing them? Is leasing a
really bad thing? Or is that something that say, like
I retire one day and I'm like, I'm just going
to get a new car like every three years. Would
you would you say leasing's okay? Because I listen, when
I retire, I'm not going to be driving a whole lot,
and my mileage will be really low because I'm going
to be like this old lady who just sits at
home a lot.
Speaker 2: Yeah, let's just get real.
Speaker 3: So two ways to look at it, right, What I
would say is this, if you are in a place
financially to where the the when you're thinking about whether
to buy or to lease, that decision is not a
monetary decision to you, right, then I'd say go ahead
and lease, right Because if you're if you're at that
point in your life where a car, a car.
Speaker 2: Is a cost to you, you're okay with that, and
you just like a new car every two to three years.
Speaker 1: Right because you've never had them. You've never had the
new cars, and you're like, you know what, I'm retired now,
I want to have like a new car every couple
of years. I'm just going to lease them and just
do the least thing.
Speaker 3: And I know a lot of folks that do that.
Is it a better decision? It depends on how you
get the lease. You know, when we say buy or lease,
a lot of it depends on how you buy or lease, right,
So you can get good or bad deals there too.
Speaker 2: But I would say this.
Speaker 3: If you are talking about wanting to get a new
car every two to three years, I think the LEAs
thing makes more sense than buying.
Speaker 2: Yeah, that's that's my opinion. Truthfully, Financially, it's pretty close.
Speaker 3: Yeah, which shouldn't surprise most people, right, Like, that's it's
pretty close.
Speaker 2: For a reason.
Speaker 3: If you cannot afford to purchase the car outright though,
and it is a financial decision, you should not, you know.
I it's crazy. I see situations all the time where
people have got over fifty percent of their annual income
in cars sitting in their garages or car and yeah,
and I literally three to thirty five hundred dollars a
month in car payments between the two peoples.
Speaker 1: God, it's just out. And then that doesn't even include
insurance and all that.
Speaker 2: I know, that's a mortgage that I remember what twenty
five dollars. That was a crazy mortgage.
Speaker 1: Yeah, that's just insane, I know, I know.
Speaker 3: And you're just burning you're burning that money. It's on
a depreciating asset. It's a guaranteed loss. And even if
you should have you know, you know, you're thinking about
it correctly, Like, even when you can afford.
Speaker 2: To go pay cash for a car. It should hurt.
Speaker 3: And the reason it should hurt is because you're thinking
about money correctly, and you're sitting there going, boy, that's
a lot of money to stick in something that I
know is going to lose money.
Speaker 1: Yeah, it immediately depreciates. It's exactly what it does.
Speaker 2: Yeah, we continue to do so. Right.
Speaker 1: Yeah, do you ever see the Do you ever see
the prices of cars coming down? Or do you think
that we're just like now, we're just on a spiral up.
Speaker 3: You know it. I think that what you've seen, I mean,
I don't think you're going to see cars continue to
rise and increase in price at this pace.
Speaker 1: Yeah.
Speaker 2: I think that what you've seen is kind of a renormalizing.
Speaker 1: Of car values and nabilize a little.
Speaker 2: Yeah, it should. I mean, you know, I think I
think cars are responding. I think car prices have responded
to a lot of things.
Speaker 3: I mean, go look at what's happened to the average
minimum wage price around the country over the last five years. Right, Yeah,
that's gonna have a dramatic and that's gonna have a
dramatic impact on the price of cars. But yeah, cars
will continue to go up I mean, you know it's
not it's not that long ago. I mean, shoot, you
know what early to mid seventies, you could have yourself
a pretty cool, brand new car for thirty two hundred bucks.
Speaker 1: Right, and now you're looking at an SUV for like
one hundred something grand.
Speaker 3: It's crazy, no, I know, and not even crazy like,
like I said, a nicely outfitted suburban, not the GMC.
Speaker 2: You're you're around ninety to one hundred thousand dollars for
one of those.
Speaker 1: I mean, it's just insane, right, And I remember, I'm
old enough to remember when you could buy a condo
for that much.
Speaker 2: Oh yeah, you know, it's like that's like I know.
Speaker 1: So for Gen xers, it's especially painful to look at
the prices on cars these days because you're like, wait
a second, can't my brain cannot compute, I can't.
Speaker 2: Well, and that's what why people look, you know. And
I've got tons of clients.
Speaker 3: I've got people that have gotten rich all kinds of ways,
via investing, via working for themselves, via working for somebody else.
I'll tell you what the most common thread that I
see you if you could take the average person and
get them to be fiscally disciplined just around cars, it
would make a substantial difference in their financial well being
thirty to forty years out. The amount of money that
we waste as a society and as a country and
a culture. Really it's more about a culture than is
a country. But on cars, it's just it's just astounding,
you know. And I don't think people think about it
that way, and they should. And it's just if they
could liberate themselves from that one thing and be disciplined
with that one thing and take that extra money that
they would be spending on cars and invest it, that
alone would make a massive difference in the end of
their story.
Speaker 1: And this is why everybody needs to talk to you exactly.
Why So where can they find you and talk to you? Where?
Speaker 2: Tell us you?
Speaker 3: Yeah, you can find us at Barcapitalmanagement dot com, Know
your Risk Podcast dot com. We do our daily show,
the Daily Dots. Not hard to find it all. Yeah,
it's is Borordcapitalmanagement dot com. Know your Risk Podcast dot
com And throw those into Google and search for us
on YouTube and you'll find our video content on there.
Speaker 2: And yeah, not hard to find.
Speaker 1: He's the guy to help you get rich. You guys,
do it. Zach Abraham, thank you, Thank you, Fun as always.
Speaker 2: Investment advisory services offered through Trek Financial LLC and SEC
Registered Investment Advisor.
Speaker 3: The opinions expressed in this programmer for general informational purposes only,
and are not intended to provide specific advice or recommendations
for any individual or on any specific security. Any references
to performance of security so thought to be materially accurate
and actual performance may different invests spans involved risk, and
are not guaranteed.
Speaker 2: Past performance doesn't guarantee future results. Track twenty four three
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