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If you don't want to be like everyone
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else, then you have to avoid the number
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one wealth killer that nobody talks
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about. Take a look at this chart. It
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shows how the average person spends
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their money each month. And believe it
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or not, one of these categories is
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quietly killing your chances of building
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wealth. So, let's uncover it together.
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First up, housing. This is the biggest
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slice of the pie. So, it's definitely
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the wealth killer, right? Well, although
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paying rent or a mortgage is expensive,
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at least it provides you with a place to
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live. Next,
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taxes. Nobody likes these. Well, unless
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your name happens to be Gary Stevenson,
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but let's not get into that. Next,
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utilities and household expenses.
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They're not fun to pay, but you can
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easily get them down by calling around
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for the best deals. How about all of
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these? There are so many of these little
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expenses, but most of them are flexible.
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So, that leaves us with one section
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left. Can you guess what it is?
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transportation, car payments, insurance,
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fuel, repairs, parking, all for
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something that goes down in value every
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single day. The average new car costs
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nearly $48,000.
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It's not an investment. It's not
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building your wealth. And in most cases,
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it's just a financial black hole on
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wheels. That's why out of all of these
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expenses, transportation, specifically
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your car, is the number one wealth
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killer. And it's only getting worse.
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There's been an absolute explosion in
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the amount of money people owe on their
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cars. It's honestly getting out of
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control. Let me show you what I mean. In
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2005, total auto loan debt was sitting
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at $720 billion. 5 years later, it
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reached $850 billion. Fast forward to
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2020, it's rocketed all the way up to
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1.38 trillion. And in 2025, we're sat at
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an all-time high of $1.62 trillion. This
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has led to more people than ever being
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what I like to call car poor. This is
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when you're making just enough to cover
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your car payments, but not enough to
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build wealth at the same time. It's like
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you're trapped on a treadmill that never
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slows down. But why get on this
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treadmill in the first place? Well, more
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people than ever care about their image,
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and driving a nice car is one of the
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quickest ways to impress other people.
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The car industry spends billions of
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dollars convincing you that a new car is
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going to transform your image,
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confidence, and maybe even your love
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life. They don't show you sitting in a
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traffic jam on a rainy Tuesday after
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getting slapped with a $600 repair bill.
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Clever marketing makes you feel like
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success is finance, but really, it's a
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lie you're being fed to keep you
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trapped. Look at the Cyber Truck. That
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wasn't sold on practicality or daily
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use. It was sold on the image of power
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and looking like you're straight out of
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a sci-fi film. Social pressure fuels
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this, too. Nobody claps when you drive
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an old Honda that's paid off and running
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smoothly. But if you roll up in a brand
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new BMW on finance, people tend to give
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you approval and assume you're doing
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really well for yourself. I see so many
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young lads these days trying to look
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successful rather than actually trying
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to be successful, especially in cultures
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where car ownership gives you
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credibility. This need to look rich is
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what's causing this to happen. It makes
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people stretch their money so thin that
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the car actually ends up owning them.
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This car poor trap gets even worse for
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some people as they borrow more than the
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car is actually worth. It sounds silly
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and you might be thinking, why would
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anyone do that? But it's actually very
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common and it's called being in negative
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equity or upside down on the loan. In Q4
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of 2023, nearly one in four people were
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in this exact position. So, this could
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result in you owing $40,000 on a car
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that's only worth $30,000.
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This means you're $10,000 in negative
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equity. I've actually had a lot of
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people email me after reading my free
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weekly newsletter saying it helped them
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avoid traps like this and even make a
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bit of extra money with some of the
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strategies I share. It's something I
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just do for fun and I really enjoy
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reading the replies. So, if you want me
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to send you those emails, too, I'll drop
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a link in the description. Anyway, if
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you want to avoid being car poor like
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most people, then you need to understand
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the true cost of that so-called
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affordable car sitting in the showroom.
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I feel like a lot of people don't
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understand that the sticker price of a
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car is far from the true cost of owning
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that car. Let me explain. Take a look at
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this Honda Civic. It's the most commonly
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purchased car by people aged between 18
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and 24 in America. And on the surface,
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it looks like a sensible choice. The
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sticker price is
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$27,867,
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which seems reasonable. However, let's
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dig into the true cost to own this car
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over 5 years. First up is depreciation.
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And on this car, that's $10,999.
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This cost starts the second you drive
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your new car off the lot as it drops 10
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to 15% in value before you even make it
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home. Over 5 years, you'll lose nearly
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$11,000 to depreciation alone. Think
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about that. $11,000
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just gone. All because time passed and
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your car got older. It's like paying
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$2,200
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every year for the privilege of watching
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your money evaporate. Next is insurance.
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This is nearly $12,000 over 5 years, and
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that's a conservative estimate. This
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figure is based on a 40-year-old with a
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perfect credit score and a clean record.
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If you're a young guy, then this number
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is actually much worse. You're probably
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looking at double that. Sure, you can
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get this down a bit by calling them
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every single year, negotiating, and
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never staying loyal to one company, but
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it's still going to be a high cost. Even
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if you do manage to get a bit of a
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discount each year, then there's fuel.
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$6,415
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just to keep the thing moving. This is
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actually getting so expensive. Now, for
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financing, this is the cost of not
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having cash up front. $4,719
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over 5 years assumes you've got a decent
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credit score and put down 10%. But if
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your credit score is bad, then you could
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be looking at 15 to 20% interest rates
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instead of the 6 to 6 1/2% I'm showing
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here. That's why I always drill home the
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importance of building up a good credit
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score by having a credit card and
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putting small monthly expenses on it
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that you pay back in full at the end of
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each month. This means you avoid paying
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any interest and prove that you're a
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responsible borrower. Next up is
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maintenance. $3,224
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[Music]
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over 5 years for oil changes, brake
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pads, tires, the list goes on. However,
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you can do this a lot cheaper if you
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learn a little bit about cars. I used to
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race in car championships, so I know the
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ins and outs of how to fix stuff on my
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car. This has saved me thousands over
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the years. I mean, if you learn to
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change your own oil, you'll save $30 to
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$50 every single time. And if you buy a
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basic OBD scanner for 20 to 30 bucks,
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you can diagnose most problems yourself
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instead of paying the garage $100 just
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for them to plug it in and tell you
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what's wrong. Then taxes and fees. This
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is just the government's cut. Road tax,
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registration, and inspection fees will
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come to around $2,800 over 5 years.
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Finally, we've got repairs. We'll budget
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$1,790
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for this over 5 years. These surprise
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expenses are killers if you're not
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prepared for them. Even reliable
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vehicles like the Honda Civic will
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eventually need repairs beyond normal
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maintenance. This is exactly why you
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need an emergency fund of 3 to 5 months
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of your living expenses. Without it, a
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single major repair can derail your
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entire financial plan. With cars, it's
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not a matter of if something will break,
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it's when. So, let's add all this up.
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Drum roll, please. Your affordable
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$27,867
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Honda Civic actually costs you $46,821
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over 5 years. But it gets even worse
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than this, as this doesn't even consider
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opportunity cost.
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This is where it gets really painful.
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Let's look at a 5-year comparison
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between someone that chooses the car and
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someone that chooses to invest. If you
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decide to choose the new Honda Civic in
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our example, then after 5 years, you'll
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only be left with $19,295.
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This is, of course, after reselling the
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car at its current market value. That's
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assuming it's been wellmaintained with
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minimal damage. That's a loss of over
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$27,000 in net worth. No wonder it's
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such a wealth killer. However, if you
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choose to take that same $780 monthly
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payment and stick it into an S&P 500
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index fund based on the historical
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average return of around 10% per year,
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after 5 years, you'd have approximately
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$60,16.
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Of course, past results can't guarantee
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future returns. However, if it followed
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the same historical pattern, then that
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would be a gain of over $13,000 in net
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worth. That's a price difference of
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$40,721.
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That means by choosing a car over
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investing, you could be giving up
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$40,000 of wealth. Most people repeat
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this cycle every few years for their
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entire working lives. This is just one
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example of putting your money to work.
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You could choose to invest in starting a
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side hustle, buying a rental property,
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or even launching your own full-blown
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business. The key is getting your money
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working for you instead of against you.
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That's not even mentioning individual
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stocks and crypto. Although they are
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riskier investments, but to put it into
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perspective, if you'd invested that same
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$46,821
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in Microsoft stock 5 years ago instead
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of the Honda Civic, you'd have seen a
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$224%
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total return, turning your money into
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over $150,000
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today. Think about that for a second.
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The same money that bought you a
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depreciating car could have bought you a
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small fortune in one of the world's most
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successful companies. The point isn't
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that you should never own a car. It's
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that every financial decision has an
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opportunity cost. Every dollar tied up
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in something that loses value is a
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dollar that's not compounding in your
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favor. You might be thinking, if this is
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true, then why aren't more people
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investing? And to be honest, I think
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it's because they don't understand how
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to actually do it. Back in my day, it
00:10:36
used to be very difficult as you had to
00:10:38
phone up a stock broker. However, now
00:10:40
you can use platforms like trading two
00:10:42
and two right from your phone. You can
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set up an account, deposit some money,
00:10:47
and then search for SNP
00:10:50
500 if you want to keep it simple and
00:10:53
away you go. As I was planning on
00:10:54
talking about Trading 212 anyway, I
00:10:57
reached out to see if they'd be
00:10:58
interested in sponsoring this portion of
00:11:00
the video. They agreed and are also
00:11:03
offering a free fractional share worth
00:11:05
up to £100 to anyone using the code
00:11:09
Tilbury
00:11:12
in the promo code section of the app.
00:11:16
Now look, I get it. In many places, not
00:11:19
having a car means losing opportunities.
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A study by Capital One actually found
00:11:24
that 67% of people said owning a car
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opened up income opportunities they
00:11:29
wouldn't have had without a car. So that
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shows that sometimes there is a clear
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opportunity cost of not having a car. So
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I'm not against getting one, but if
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you're smart about it, you can still
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free up hundreds per month to invest. So
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if you want to buy a car and invest,
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then here are the three steps I'd
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recommend following. Step one, buy in
00:11:50
the sweet spot. This is when you buy a
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car that's 3 to four years old with 30
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to 40,000 miles on the clock. This is
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great because you dodge the brutal
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firstear depreciation hit, but still get
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modern safety features, reliability, and
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often remaining warranty coverage. A car
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that costs $35,000 new might be $24,000
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at this age. So that's $11,000 in
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instant savings you can invest instead.
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Step two,
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follow the 15% rule. Your total
00:12:22
transport costs, including monthly
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payments, insurance, fuel, and repairs,
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should never exceed 15% of your monthly
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income. If you earn $3,000 per month,
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that's a maximum of $450 for all car
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expenses. Push past this and you're
00:12:39
getting dangerously close to becoming
00:12:40
car poor. Step three, keep it for more
00:12:43
than 10 years. This is where you
00:12:45
actually build wealth. Most people trade
00:12:48
in their cars every three to five years,
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which is financial madness. Instead, buy
00:12:53
once and maintain it like your financial
00:12:55
future depends on it, because it does.
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If following these steps saves you $300
00:13:00
per month compared to buying new, that's
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$3,600
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every year. Invested at 10% annual
00:13:07
returns, that becomes more than $118,000
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over 15 years. That could be the down
00:13:13
payment on a house. all funded by making
00:13:16
smarter car choices. If you want me to
00:13:18
walk you through how to set up an
00:13:19
investment account step by step, then
00:13:21
I'm going to leave that video right up
00:13:23
there. But don't click on it just yet.
00:13:25
Make sure to subscribe if you want to
00:13:26
grow your wealth. Okay, I'll see you
00:13:28
over
