056: Money Moves in your 20s
Tip 09: Never buy depreciting assets
Tip #9 Never buy depreciating assets
Your 20s are time of your life to work hard and accumulate as much wealth as possible.
Cars are not assets that appreciate in value. So, then why buy them new to begin with? I understand that many need to go to work and a car a means of transportation.
Here are some financial guidelines to help you stay on budget if you need to buy a car:
The 20/4/10 rulle
Here is how it works:
- Put 20% down payment on the purchase price
- If financing, no more than 4 years term
- Your monthly payments should be no more than 10% of your gross monthly income
Now it’s your turn to do the numbers. So how expensive car should you buy?
Here are alternatives to owning a car:
-Do you live in a city where public transportation is available?
-How about car share service, such as Zipcar or Getaround
-Use Uber or Lyft
-Can you lease a car? Does your cashflow allows for extra payment?