So, the other day, my oldest daughter asked me a question, or more like a statement. Now, it may be a teenager thing, but had me thinking. ‘I wish you could afford a Hellcat daddy’. I said ‘I can afford one!’ But then I actually did the math…
Now believe me, I understand this is an over-generalization. Many people that have one of the very popular Dodge vehicles may have very nice incomes to compensate for the purchase. However, I’m basing it on the average medium income in America at $58K a year. To purchase a product with a starting MSRP of around $80k and up with the Hellcat line. I’m also basing it on the individuals at my place of employment that I know for a fact do not make yearly what the vehicles purchase price is! One of which is living in an apartment! Nothing wrong with an apartment. However, the allocation of their income is being misplaced, in my opinion.
Lets start with the obvious. Even with a decent down payment, your monthly payments will be a minimum of around $1K/month! This is assuming an eight year loan, with $5K down and %5 interest. You are tying up your income from your hard work for eight years. If you make the nations average salary, that’s a quarter of your income, before taxes going to transportation (an un-needed expense). Now if that’s what you want to do, we are all grown. My goal is to make us all better than average Joe’s!
One of the ways I’ve been able to put so much in my retirement accounts, build a six month emergency fund and invest; is by keeping my transportation cost low. I have a salvaged title 2006 Impala I payed $3K cash for eight years ago! It’s my daily driver. Have I had issues over that time, of course. But I can guarantee it wasn’t $80k worth.
You might say, ‘ Well I don’t want the hassle of a used car’ or ‘ I’m just getting someone else’s problems.’ You may be absolutely correct and justified in your responses. I would argue, I don’t want to have to slave for ‘the man’ to pay for nicer transportation. Don’t get me wrong. I would love to have a vehicle like that in my future car collection. But, not at the expense of my future goals. If I tied up a quarter of my income up for transportation, another quarter for rent or mortgage, another quarter for utilities, fuel, insurance, maintenance; we leave little room for food, living and almost nothing for growing our wealth! This is not the wisest decision we can make.
Well Dang! When can I enjoy a nice Dodge Hellcat or Demon? I don’t have one, so I hate to say I don’t know exactly the best method to get you one. I do, however, have a plan to afford such a vehicle in the future. It’s not hard but it will take patience ( lots of it)!
If we were to get such a nice car, my preferred method would not be to pay for it with the income from my job. No No! we don’t need to steal it or borrow it indefinitely from a friend! I would want an added source of steady income or investment that doesn’t involve my constant effort to pay for it. This would be such things as a side hustle that I enjoy doing or a rental property. For example, the reason I’m creating these blogs and videos is because I enjoy talking, helping people with finances and other life perspectives. As, of this writing, I don’t make any money from this, but that is my goal. My income from my main job is taking care of my families needs as well as securing retirement and investment goals we have. When I make income from here It would go towards bigger investment goals and a percentage will go towards nice things. I hope this becomes my main job, so if any of this helps, please consider following and sharing!
My only other preferred method would be to have a great income compared to the vehicle. In this case the hellcat. I would need to make at least twice the price of the vehicle, which is $160K a year. In this way, I can pay the vehicle off in less than two years and still invest and save. Now this advice I derive from my favorite financial inspiration, Dave Ramsey with Ramsey Solutions. His suggestion to not have the total of all vehicles with a motor not be more than half your annual salary; or you have to be able to pay all vehicles off in less than two years. This advice frees up our wealth building tool, our income so that we can be wealthy and financially free! I love this! I just wish I could get my income up to afford nicer vehicles… But ‘this is the way’ ( The Mandalorian). Sorry love that show.
In conclusion, we are all in different places financially. So this can apply to many vehicles. It’s just that my daughter brings this to my attention, and I can’t afford a Hellcat with the guidelines I find to be wise, in my opinion. And we didn’t even touch on the insurance, likely hood of tickets or fuel cost which also increase the ownership expense in this vehicle. So I had to confess to my daughter that I couldn’t do what I thought I could because it wasn’t wise and to explain why most are probably not wise as well. If you meet these guidelines and are not feeling stressed paying your bills or worried about what the economy looks like in the future. Enjoy your Hellcat or Demon (just let me see what it feels like). I want us all to be less stressed because we had car fever. Every year there’s a new car coming out and we are not running low on awesome new features. We are running low on ways to afford groceries. So be wise and ride! Smart….
Average Joe Chronicles 