Watch This Before Financing A Car In Your 20s (POV)

Summary

In this video, the creator discusses the decision to buy a 2012 Volkswagen Jetta as their first car, emphasizing the importance of financial responsibility. Instead of purchasing a new, expensive car with a loan, they chose a low-cost, reliable used car to prioritize savings for future goals like buying a home and planning a wedding. The creator highlights the benefits of lower insurance costs, flexibility, and stress-free car ownership, stressing that wealth isn't about flashy cars, but about financial stability. Ultimately, the car serves their needs without the burden of a car loan.

Takeaways

• 😀 The speaker bought a 2012 Volkswagen Jetta with low mileage (36,000-37,000 km) for under $10,000, prioritizing financial responsibility.
• 😀 At 26 years old, the speaker values personal finance and financial balance, aiming to save for a home, a wedding, and travel while enjoying hobbies.
• 😀 The decision to avoid a car loan was based on the desire to not overextend financially and to maintain flexibility for other goals.
• 😀 Owning a used, older car offers lower insurance costs and fewer financial burdens compared to a new, expensive car with a car loan.
• 😀 Many believe newer cars are more reliable, but with research, one can find a dependable used car that is cheaper to maintain and repair.
• 😀 The 2012 Volkswagen Jetta, with its 2.5L inline 5 engine, is considered reliable and affordable, making it a better value than similar Japanese models in the used car market.
• 😀 Choosing a less expensive car reduces the stress of potential damage, and it's easier for young drivers to learn about car ownership and maintenance.
• 😀 Depreciation is a major factor to consider: newer cars lose value quickly, making it financially unwise to buy an expensive new car early in life.
• 😀 Buying a used car with cash offers more flexibility than taking out a loan, allowing for easier upgrades and financial freedom.
• 😀 Social pressure can lead people to overspend on expensive cars, but it’s important not to compare oneself to others based on material possessions.
• 😀 Wealth is not visible in cars or material items but in savings and investments. A fancy car doesn’t necessarily reflect financial stability or wealth.

Q & A

Why did the speaker choose to buy a 2012 Volkswagen Jetta instead of a more expensive, newer car?

The speaker chose the 2012 Volkswagen Jetta because it was more financially responsible, allowing them to avoid taking on a car loan and allocate money towards other important life goals, like saving for a home and planning a wedding. Additionally, the car was reliable and affordable, offering great value compared to newer cars.

What were some of the financial goals the speaker prioritized over purchasing an expensive car?

The speaker prioritized saving for a down payment on a home, preparing for a wedding, and budgeting for travel with their partner, all of which contributed to their decision to buy a more affordable car.

How does the speaker feel about taking on a car loan?

The speaker believes that taking on a car loan is not financially responsible, especially early in their career. They preferred to buy the car in cash to avoid the stress of monthly car payments and to retain financial flexibility.

What factors contribute to the high cost of owning a new car, according to the speaker?

Owning a new car involves high costs such as car payments, insurance, maintenance, repairs, and fuel. Newer cars typically have higher insurance premiums and repair costs, making them more expensive to own, particularly for young drivers with less experience.

Why does the speaker believe that buying an older car can be a good decision for a young driver?

The speaker believes that buying an older car is financially prudent because it reduces the risk of financial strain from a car loan, lowers insurance premiums, and minimizes the stress of maintaining a new, expensive car. Additionally, it offers a more affordable entry point into car ownership.

What is the significance of the 2.5L inline-5 engine in the Volkswagen Jetta?

The 2.5L inline-5 engine in the Volkswagen Jetta is known for its reliability and durability, making it one of the most dependable engines Volkswagen has produced. The speaker highlights that this engine is 'bulletproof,' making the Jetta a smart choice for a used car.

How does the speaker view the car buying market for used cars?

The speaker acknowledges that the used car market can be challenging, but believes that with proper research, it's still possible to find a great deal on a reliable used car, even in a market with inflated prices.

What does the speaker say about social pressure related to car ownership?

The speaker warns against falling into the trap of comparing oneself to others, especially with social media's influence. Just because someone has a flashy new car doesn’t mean they can afford it or that it reflects their true wealth. The speaker encourages young people to focus on their own financial path rather than trying to keep up with others.

What role does the book 'The Psychology of Money' by Morgan Housel play in the speaker’s perspective?

The speaker mentions that 'The Psychology of Money' changed their perspective on wealth. The book emphasizes that being 'rich' in terms of appearances (like owning a flashy car) doesn't equate to being 'wealthy' in terms of financial stability and assets.

How does the speaker feel about their choice of a 2012 Volkswagen Jetta after owning it for a while?

The speaker is satisfied with their choice of the 2012 Volkswagen Jetta, as it provides reliability, financial flexibility, and peace of mind. They enjoy the car’s features and appreciate that it meets their needs without the stress of a car loan.