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The Personal Finance Podcast
How Much Car Can You Really Afford (By Income!)
00:37:33
In this episode of the Personal Finance Podcast, we're going to talk about how much car can you afford by income?
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- [00:01]
Andrew
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Co-Host
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Andrew
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- [01:21]
Co-Host
On this episode of the Personal Finance Podcast. How much car can you afford by by income? What's up everybody and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of MasterMoney Co and today on the Personal Finance Podcast we're going to be diving into how much car you can afford by income. If you guys have any questions, make sure you join the Master Money Newsletter by going to MasterMoney co/newsletter. And don't forget to follow us on Spotify, Apple Podcasts, YouTube or whatever your favorite podcast player is. And if you're getting value out of the show, consider leaving a five star rating and review on Apple Podcasts, Spotify or your favorite podcast player. Now today we're going to be diving into how much car you can afford by input coming when we dive into this episode. I am really excited to go through this because we are actually going to provide you with a free resource in this episode as well. So we have a car buying spreadsheet that you can download for free if you go to MasterMoney Co resources that is going to take you through all of these numbers that I'm going to be talking about today and what we're going to do is talk about how to figure out how much car you can afford by your income to ensure that you do not stretch yourself. There is too many people in this country. There is way too many people right now that have a super high car payment. In fact, the average monthly car payment is $734 and the average used monthly car payment is $525. Now, based on the average income in the US right now, that is way too high for most people. And so we're going to show you how to figure out if you can actually afford that vehicle today. Now, the first thing I want to dove into though is before we go into the question of can you afford a vehicle when you finance it and how to finance a car and all those different things, I first want to say this. The number one thing that you should consider if you are buying a car is paying cash for that vehicle. Cash is king when it comes to buying cars.
- [03:43]
Andrew
There's a bunch of different reasons why.
- [03:44]
Co-Host
Number one is there's no interest payments, meaning you're not paying more for that vehicle in the long run. So there's no interest payments. And so that is a really powerful thing, especially in a high interest rate environment like right now. I know people who have 7, 8, 9% interest rates on their vehicles. And there are other predatory places who sell used cars to people who are charging 10, 15 and 20% interest rates on vehicles. If that is you, if you're going into high interest debt on a car, then try to wait longer until interest rates come down. The argument against utilizing cash is if you are in an environment where there's 1 to 2% interest rates, then you're probably in a much better situation to just finance that vehicle if you want to. But when it comes to depreciating assets, for the most part, I always want you to pay cash for them if you can. Now, not everybody can afford to pay cash. I'm realistic here. I know most of you will not pay cash for cars, but if you can, and if you're very serious about financial independence or you want to retire really early, try to find a used vehicle that you can pay cash for. Now, we have done social media videos in the past showing, hey, you can find a used Honda Accord, you can find a Toyota Corolla, a reliable vehicle that has less than 100,000 miles on it for less than $10,000 cash. And so it is an option for those people who really want to pursue financial independence and you want to achieve financial independence that much Quicker. The second reason is you have no monthly payments when you pay cash. So obviously you can take those extra monthly payments and you can put them towards your investments. Or if you want to go on vacation more, if you want to do more things with your family, you could utilize those dollars towards things that you value. So if you don't need the flashy whip, if you don't need to ghost ride the whip down the street and show off to everybody else, then you can go ahead and pay cash for a vehicle. Or if you are making good money, then it might be in your best interest to pay cash. Now, I'm not saying take your emergency fund to pay cash. I'm saying you are setting cash aside every single month for this specific purpose. Three though, is that you avoid going into debt for a depreciating asset. I absolutely hate depreciating assets. And the last thing I really want you to do is go into debt for a depreciating asset. 4 Is it also can help you lower your insurance costs. So your monthly maintenance costs can be lowered if you pay cash because lenders usually require you to have higher levels of insurance. And then lastly, you have peace of mind because you have a fully paid off car. So for those of you out there who finance a car and once you pay off that car, drive that car for a longer period of time. We're going to talk more about that here in this episode. But drive it for longer if you can. The more years you have no car payments, the more likely you are to build a tremendous amount of wealth. And removing this wealth killer from your life can be so incredibly powerful. This is why we set up these rules that I'm going to be talking about here in a second. And then we're going to go into how much you can afford by income. But first, let's get into my car buying rules. All right, so if you want to buy a car without wrecking your finances, I'm going to talk through our car buying rules. Now, I have discussed a couple of different car buying rules in the past where we have actually talked through, hey, well, if you're willing to work for a longer period of time, you can spend 20% of one year gross income and you can go and buy a car that way. But if you want to become financially independent, you want to try to target something like, like 10% of your income in one year. But what I did is I started to develop this over time, two different scenarios. And I started to look at, well, how do I personally go out and buy Cars. I just bought a new vehicle. Over the course of last year, we had our third baby and so we were outgrowing the vehicle that we were in. So I bought a car and I went and really developed these parameters around exactly how I wanted to manage this situation. And so what I did is I came up with brand new rules for car buying that I think is going to help a lot more people. Because what I wanted to do was make this easy for you to plug and play, which is why we developed this calculator as well for free. But I wanted to make this easy to just plug and play so that you understood, hey, how much am I spending based on my income? So if you want to buy a car without wrecking your finances first, I'm going to talk through this rule. So the rule is 24, 12, 10. I want you to remember those four numbers. 24, 24, 12, 10. So what does the 20 stand for? The 20 stands for 20% down payment. Now, a lot of people are going to gripe at this. They're going to say, why would I put 20% down on a car if I'm already financing it? Why don't I just front all that money and put as little as possible down? Here's why. Because when you go out and buy a car, typically especially a new car, those cars are going to depreciate 20 to 30% within the first year. And so because of this, if you go out and you drive a brand new car off the lot and you are so happy, you got that brand new car smell, you're driving it down the street, a month goes by, that brand new car smell is slowly wearing off. But you still absolutely love your car. But you're sitting at a red light and you start scrolling on your phone. Once you do that, all of a sudden the light turns green and you start driving and you're not paying attention, you're still scrolling on your phone from the red light. Most of you know who you are who do this and all of a sudden traffic stops because there's traffic up ahead, but you're still scrolling on your phone and you slam into the back of somebody else and you total your car. If you go and total your car in that situation where you have taken a massive depreciation hit, you are going to be underwater on your car and you're going to be paying out of pocket to pay off the balance of that car. So if you don't put 20% down, you have a major situation. Now, I will talk about gap insurance in A second. Because some people will say, hey, why don't I just get gap insurance during that timeframe? We'll talk about that in a second. So 20% down is what I want you to do so that you're not upside down on your loan and it can reduce the cost of your loan as well. Also means that you put skin in the game on this vehicle. So if you want to go out and buy a car, make sure you are saving in your high yield savings account a little bit of money so that you can put 20% down. And we'll talk about those numbers as we look at different incomes. Next is the number four. The number four is so that you don't stretch out your loan for 5, 6, 7, 8, 9, 10 years over the course of the life of this car. I don't want you to have car payments for the rest of your life. And so because of this, we want to make sure that you are reducing the amount of months that you have on your car payment. A lot of people will stretch it out six to seven years so that they reduce the amount they have to pay every single month. I want you to have four years or less. And typically, if you want to optimize this, three years or less is even better. But four years or less on your car payments, try to minimize the amount of years that you have car payments so that when the car is paid off, you have those additional years to take this extra money and put it towards your investments or your wealth building or whatever else you are prioritizing at that point in time. So 20% down, four years or less. Now we get to 12. 12 means 12% of your gross income on total car costs. What does that mean? This breaks down into two different areas. 7% or less I want you to be spending on your car payments, meaning that when you have car payments come up, you should be spending 7% or less of your gross income on the car payment every single year. So if you make $100,000 per year, let's do some easy math. You can spend seven grand per year on car payments and then 5% or less will cover everything else. So insurance, gas and maintenance, all three of those things. Now, why did we change this from 7? Because typically what we've talked about is just 7% or less on car payments to 12% of your overall costs on cars. The reason why we did this was because the way to get around and still spend way more on your car was to buy a luxury vehicle. And luxury vehicles have really, really, really high maintenance costs. Meaning that you can go and get an oil change in a Mercedes. I'll tell you this right now from experience, because my wife had a Mercedes and we got rid of that thing and it was the best thing I ever did. But you could have a Mercedes and you could spend 2 to $3,000 per.
- [11:42]
Andrew
Year on one oil change.
- [11:43]
Co-Host
It is absolutely insane. And the maintenance costs are so incredibly high on luxury vehicles that it could absolutely des your car budget because you are spending too much on the maintenance. So you got to make sure that you are keeping it. 12% or less of your cost should be spent on maintenance. Or less is the key here. I want you to spend less if you can, especially if you're in that mode of building wealth and you're trying to get your retirement accounts maxed out and you're trying to get to that point in time where you can even just get started investing. You need to spend the or less because I don't want you to spend way too much on a depreciating asset. And you will never get ahead financially if you spend even more than that. So 12% or less is the key here. And then lastly is the 10. The 10 stands for. Your goal every time you buy a car is to try to drive this thing for 10 years or longer if you can. Now, I know situations change every decade. I know a lot of factors could come into play in terms of maybe you have more kids or your lifestyle changes or you get married and all these different things are going to happen, but your goal is to drive that car for 10 years or longer. I have driven every single vehicle that I have ever owned for 10 years or longer. And it has served me very well because I go years and years without car payments. The longer you drive that vehicle, if you only have a four year max of car payments, that means you have six years where you have no car payments. This is going to allow you to save for the next down payment. This is going to allow you to put those extra dollars towards wealth building. And in fact, for some of you, if your income keeps rising, this may allow you to pay cash for the next vehicle as well. And so there's a lot of flexibility you have in play when you drive cars longer. The longer you drive vehicles, the less you were paying over time. Now, guess what else you're not missing out on? Because the big factor here is that if you start to drive cars for a shorter period of time, maybe you trade them in every five years. Well, you are recycling that payment every five years. And what's going to happen here is.
- [13:33]
Andrew
You'Re going to lose out on that.
- [13:34]
Co-Host
Opportunity cost as well, which is a million dollar opportunity cost, meaning the dollars that you could be spending towards investments. If you compound that same amount, if you take that monthly payment and you compound it over that time frame, it is over $1 million if you're spending, say 500 bucks a month on a car payment. So this is a really, really big deal. Staying within this, these parameters is $1 million decision. And so you got to make sure that you are thinking through these numbers before you go through this process. Now, in that spreadsheet that we have linked up for you down below, it is going to give you these numbers based on your income. But what I'm going to do is I am going to go through some of these based on your income. But first, let's discuss gap insurance. Now, if you don't know what gap insurance is, it is an insurance that covers between what you owe on a car loan and what the car is worth if it is totaled or stolen. Okay, so let's say, for example, that you buy a $30,000 car with $0 down and finance the full amount. So after a year, that car is going to be worth $24,000, but you still are going to owe $27,000. Now, if the car is totaled, insurance is only going to cover that $24,000 because that's what the car is worth, leaving you with that $3,000 gap and gap insurance. What it does is it covers that 3,000 gap so you don't have to put that 20% down. Now here is the scenario. When should you use gap insurance? When should you put 20% down? If you are getting a really low interest rate, maybe you're getting a 0% interest rate or a 1 to 2% interest rate. I just saw, I think recently that Tesla had like 1 or 2% interest rate on vehicles. If you're getting that super, super low interest rate, then it may be in your best interest to just go ahead and not put the 20% down and get gap insurance instead. Because if you put six grand down on a new vehicle, for example, you could be losing out on 8 to 10% that it could be making in the market. That is a logical scenario, but there are not a ton of other scenarios that I really consider this. Another one though is if you're going to put 20% down and wipe out your emergency fund, like if that's the decision you've decided you're going to make, I wouldn't do that. Either I would rather have my emergency fund in place. And so then I would probably be more likely to utilize gap insurance than I would to put my emergency fund in place. The problem with gap insurance is it's going to increase that 12% much more. So it's going to be harder to fit into these parameters. When you get into 12% or less of your income spent on cars costs, it's going to increase your monthly payment and it's going to increase your insurance. So you still have to fit within the parameters. But it's. You just got to make sure that you think through that a little bit more. Now here's when putting 20% down is the better choice if you want to avoid the higher monthly payments. And it doesn't fit in to the 241210 rule. If you are buying a car with a strong resale value, then maybe you don't want to do that. Like sometimes people will buy used cars or maybe you buy something like a classic Chevelle or you buy a classic truck that has really high resale value. If you plan to to keep the car for a really long time, that may be a reason not to have gap insurance. But also if you don't want to pay for gap insurance, gap insurance is actually kind of expensive. So gap insurance can cost anywhere from 300 to $600 upfront. You have to pay an upfront premium and then it's about 20 to $40 per month after that. And so you do the math over time and you're still spending a decent amount on this gap insurance, specifically in the first year. So what is the best approach for this? If you have a really, really, really low interest rate, I'm talking that's teetering on that 0%. Maybe you want to consider gap insurance, but outside of that, I would put the 20% down and stick to the 20% because that is the highest likelihood that you are going to be protecting yourself. So for most people, you can consider gap insurance. Those are the reasons why I would consider it. But run the numbers on this. You can always double check to see what you should be doing and then kind of go from there. All right, so now what we are going to do is dive into how much car you can afford. Buy income.
- [17:22]
Andrew
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- [21:24]
Co-Host
All right, so we are gonna go over a $40,000 salary. We're gonna go over a $75,000 salary. We're over 100,000, 150,000 and 200,000 in this episode. So first let's go through and think about a $40,000 salary. So if you make $40,000 per year, let's do the math on this. If you have a 20% down payment, the range of the car price that you are going to be able to buy is 12,000 to $16,000. So this means you're going to be going out and you're going to be buying a used vehicle. And this is completely. Okay, imagine this for a second. You make $40,000 per year. What the majority of people do is they actually spend an entire year buying a brand new car. Brand new cars cost anywhere from 25 to all the way up to, you know, $100,000 now. And so this is going to be something where most of them are in that 30 to 40 range when you're getting into some of the budget friendly cars. And so we want to make sure that we are being responsible about this. So finding a used car that is A couple of years used, that is a reliable brand is going to be really, really important for folks in the $40,000 range. So if you buy a $12,000 car, for example, the down payment is going to be $2,400. And if you buy a $16,000 car, your down payment is going to be $3,200. So that is going to be the range of what your down payment would be. Now, the four year loan max means that if you buy a $16,000 car, you're going to be spending about $285 per month on your monthly payment. But the $12,000 car is going to be about $215 per month on your monthly payment. I'm telling you what, a $215 monthly payment is so much better than all these people out there who are getting these seven, eight, nine hundred dollar monthly payments. Specifically if you're per year. Now, your goal should be to increase your income, but you can find good, reliable cars in this range.
- [23:11]
Andrew
You just have to look a little bit harder.
- [23:13]
Co-Host
It's just going to take a little more work, but it is the responsible thing to do. Now let's look at 12% of your gross income spent on car expenses per year. So this means that if you make $40,000 per year, you can spend right around $4,800 on car expenses. This is about $400 per month. This means that this is your insurance, this is your gas, this is your monthly car payment, all of those various things. And so really what you're looking at is you want to spend about $233 on average on your loan because we are looking at 7% of this payment needs to be spent on your loan. And max for the other cost should be about $167 per month. Now, if you have to commute a lot for your job, this may have to go up a little bit and be tweaked specifically in this income range because you only have so much money that you can work with in this income range. So $167 per month is kind of what your. Now you may be able to adjust your car payment. And really when you're in this price range, the goal is to try to get that car payment down. And really when you're in this price range, the goal is to find the cheapest, most reliable car that you can find that's also safe so that you can just get from point A to point B. Then as you start to increase your income, then you can start to upgrade your vehicles based on that and then lastly is to drive it for 10 years. So obviously we are going to do that. So if you are looking and you're in this $40,000 range, one is buy a reliable used car in that $12,000 to $14,000 range is the sweet spot. Put at least 20% down so that you have that available and finance no more than four years. You're going to have this paid off over the course of four years or less, which is going to allow you to have extra cash available for the maintenance of your car down the line.
- [24:50]
Andrew
When you need it.
- [24:51]
Co-Host
Keep all of your car expenses under that $400 per month range and drive the car at least 10 years. And that's how you're going to follow this one. Now let's look at a $75,000 salary because you're going to see you're getting a little more cushion when you have a $75,000 per year salary. 40,000 is going to be the hardest one to stick to this. But also at $40,000 per year, if you can, I would try to buy on the lower range of that car price now at $75,000 per year. What we are going to do is we need that 20% down payment first. So how much would that 20% down payment be? Let's look at the car prices. This, if you make $75,000 per year, the car price range that you can afford is 22,000 to $32,000. You can buy a brand new Tesla for that range at the time I'm recording this. And so this is going to be something where you can get into the brand new vehicle or maybe you're getting a used SUV. So if you buy a $22,000 car, your down payment is $4,400 per month. If you're buying a $32,000 car, your down payment Is $6,400 per month. So that is the price range that we are looking at at when it comes to putting 20% down. Now let's look at the loans for a second because if we put 20% down, then we are looking at a loan over the course of the next four years. We're gonna look at four year terms on these loans. So if you bought a $22,000 car, your loan would be $17,600. That means your payment is $375 per month. Whereas if you bought a $32,000 car, your payment would be $540 per month. Month. And so the sweet spot is kind of right in the middle there. If you can get a slightly used vehicle at $25,000. Car, you've got $425 per month is what you'd be spending on that vehicle. Now let's take a look at what your max car expenses need to be. So for someone who's making $75,000 per year, your max car expenses per year need to be $9,000. So this is your car payment, this is your insurance, this is your gas, and this is your maintenance. So things like oil changes, all those different things, or if you need to repair something. So to break that down, we're going to break it down every sing. What I like for you to target is 7% on car payments and 5% on everything else. So 7% on car payments is $5,250 per year, which means it's $437 per month. And then 5% on everything else means an additional $313 per month for insurance, for gas, and for any other maintenance that you have. So this is where you can see that it becomes much more manageable as you get to this $75,000 range, where the maintenance is going to be the stuff that you really want to make sure that you're taking care of this vehicle. And so you can see when you get to the $75,000 range, you have a little more breathing room and a little more cushion when it comes to making sure that you are managing your finances correctly when it comes to your vehicle. And obviously driving it for 10 years is the big, big key. So here's kind of my recommendations. If you're in the $75,000 range, you can buy a reliable used car, or in some cases, you can also buy a new car. Just depends on the type of vehicle that you want. For me, specifically, what is I always buy a car that is one to three years old. I find that is kind of the sweet spot with the best bang for your buck. Specifically, if you are trying to get the big depreciation hit of the first couple of years off of that vehicle, and you don't want to be paying that depreciation hit, which is what I don't want to be paying, then I usually will buy cars one to three years old. So the car I bought over the course of the last year was two years old, and it already took the big depreciation hit. In fact, that car, brand new, was going to cost about 30% more than it cost used, and it had less than 20,000 miles on it. So it was one where, hey, there's not the wear and tear on the vehicle yet and it's just slightly used. That's what I would look for when you start to get into the $75,000 salary range. Now, the key here is to try to keep all of your expenses for these vehicles under $625 per month if you can. That's going to keep you in that 12% range. Now, if you need to raise this in any way, shape or form, you're going to have to reduce your expenses somewhere else.
- [28:46]
Andrew
It's the only way to make sure.
- [28:48]
Co-Host
That you are staying within the parameters of your budget. Otherwise you're going to start to overspend. And obviously, interest rate always, always, always needing to be below 6%. If your dealership or wherever else you're buying a car is saying, hey, the interest rates are above 6%, go to your local credit union and go talk to them. Usually they have lower rates on car loans and you may be able to get a much, much better rate. So that's $75,000. And next we're going to look at a $100,000 salary. All right, so now we are looking at a $100,000 salary per year here. And let's look at what these numbers are. So if you make a hundred grand per year, you can spend 30 to $42,000 on your car based on these rules. And so what we're going to look at here is first, what is the down payment looking like? Well, if you spend $30,000 on a car, your down payment is going to be six grand. If you spend 42,000, your down payment is going to be $8,400. Now, when we're looking at the four year loan max, we want to make sure that we are looking at how much this would cost over time. So if you have a four year loan on a $30,000 car, obviously the loan is going to be $24,000 because you put 20% down, 20% down is 6,000. That comes out to $24,000 on the loan. And if you're going to go to a $42,000 car, that means you are spending $33,600 on the loan. So what does that payment look like every single month? Well, on a $30,000 car, that's about 500 per month. Month. On a $42,000 car, that's about $700 per month. So you can see about every five grand, it's an additional $80 added on to that monthly payment. So what does this look like for someone making $100,000 per year. So the mass car expenses for $100,000 per year is $12,000 per year or $1,000 per month. So your car payment and your additional expenses can be about $1,000 per month. This is where it gets really, really manageable for a lot of people. Meaning that your max loan payment should be about $7,000 per year or $583 per month. And your max other cost should be about $417 every single month or $5,000 per year. Now, these numbers can be tweaked. For example, if you want to get a nicer car, but you can keep the maintenance costs lower, then you can tweak that 417 down and increase that max loan up. But this means that $583 per month is the vehicle price that you can get based on making $100,000 per year. So if I were you, I'd try to stay in the 30 to 38, 000 per year range. And I'd put obviously that 20% down. And I would try to keep all my car expenses below that thousand. So I would try to keep them at $833 per month if you can. And this is just going to make sure that you stay below that range. And then you have some extra savings if you need to put it aside in order to save up for some maintenance costs over time. Time, because you're always going to have maintenance costs, especially with vehicles when you're driving them for a longer period of time. It's going to come up where you're going to need new tires, you're going to need new brake pads. And so you got to put some of that savings aside in a high yield savings account so that you have that available when the time comes. Now, you can also utilize your emergency fund for that. That is absolutely true. But you're going to have to replenish that emergency fund down the line. So this is going to be something where you have a lot more cushion when you start to make a hundred thousand dollars per year. And you have a lot more options when you start to buy cars. Now, at $150,000 per year, your car price range is between $45,000 and $60,000 is what your purchase price is going to be. A $45,000 car is $9,000 down when you put 20% down. A $50,000 car is obviously $10,000 when you put 20% down. And a $60,000 car is $12,000 down when you have that down payment. Now, what does this loan look like? Well, if you have a 6% interest rate over the course of four years, that means that a 40 is going to cost you $750 per month. A $50,000 car is going to cost you $830 per month. A $55,000 car is going to cost YOU $915 per month, and a $60,000 car is going to cost You $1,000 per month. Even with that 20% down, really for most people, I think your rule needs to be that I really don't want you going over $1,000 per month on a car payment. I think that's where you start to get yourself. I mean, if you can afford it, more power to you. But that's where you start to see a big, big difference in the way people are spending dollars. I think thousand dollars a month car payments are just absolutely crazy. I would always try to keep mine.
- [33:12]
Andrew
As low as I possibly could.
- [33:13]
Co-Host
Next is, let's look at what your max car expenses for the year can be. That means you could spend $18,000 per year or $1,500 per month on car expenses. Now, if I were you, and you make a high income, I would try to spend way less than that every single year because you can take those extra dollars and you can start to max out some of these retirement accounts. I want you maxing out retirement accounts when you start to get to this level. And so, so Roth IRAs need to be maxed out. And if you make additional income, then it needs to be a backdoor. And then also we need to be looking at maxing out our 401ks as well. So if you also factor in another $18,000 per year going towards transportation, this can get really, really costly really quickly. So we just want to make sure that we are looking at this and very aware of that. But what that means is that maxing this out, you can spend on your loan $10,500 per year or $875 per month, and $7,500 per year, 625 on maintenance. Now, if old car, you're probably not going to spend $625 per month on maintenance. Now, if you need two vehicles in your household, meaning that you and your spouse need two vehicles, then you may be doing that. But if it's only one vehicle, spending $625 per month on maintenance is not likely unless you're buying a luxury car. So if you are in this range, look for vehicles in the $45,000 to $55,000 range. Or less. And making sure that you keep all your car expenses less than 1250amonth is going to be be the way to make sure that you stay within the parameters and stay within your means. All right, the last One is a $200,000 salary, which we're obviously you have more flexibility the more money you make. And so the car price range here is about $60,000 car. That means you put 12 grand down. At an $80,000 car, you put 16,000 down. Again, you do not need to spend this much. You can spend less than this and still be a. Okay, so for the four year loan max, that means at a $60,000 car, you're going to be spending a thousand dollars per month. At an $80,000 car, you're going to be spending 1330amonth, which I think is too high. And a $70,000 car is 1170 per month. And then at $200,000 per year, when you're looking at this, that means that your max car expenses for the year is going to be $24,000 or $2,000 every single month. So the max payments you can have is $1167 if you're taking 7% of that and $833 per month is going to be going to maintenance. Now this may make more sense if you need two vehicles. If you and your spouse each make a hundred grand a year year, you need two vehicles. That's where this would make more sense because that's what your total household income is. So this is what it looks like and how much car you can afford by income if you go outside of these parameters. If you need to spend more on a car for any which reason, maybe you need a work truck, for example, and you work in construction. If that is the case, you need to make sure that your vehicle is producing income for you. So someone in construction, they need it for their business to be able to make money that makes sense. Or if you're in lawn care or something like that and you need it to make money money that makes sense. Or if you need a sprinter van because you deliver packages, that will make sense, it will produce an income for you. But if it's something that you just drive from point A to point B and you are going outside of these parameters, it does not make a whole lot of sense in the grand scheme of things when you could be taking those extra dollars and putting them towards wealth building activities. And so this is something you really got to make sure that if you're going to spend more and outside of these rules, then you need to adjust something else. Your housing costs need to come down down or your food costs need to come down or something else big needs to come down. Because if you can control your housing, your food and your transportation, if you control those big three things, that can help your budget tremendously in the long run and help you take extra dollars and put them towards your financial freedom. That's what we want for every single one of you. I want you to spend more on the things that you value and I want you to put more dollars towards your financial freedom so that you can break free from that job and you can get out of the rat race and you don't have to be doing this day in and day out. Instead. Instead, you can do what you want, when you want, with whom you want. And that's the ultimate goal for all of us. That is what true wealth is. Listen, thank you guys so much for being here on this episode. I hope this was helpful. Again, go ahead and download that spreadsheet for free by going to MasterMoney Co Resources and you can run the numbers based on your financial situation. And let me know if you have any questions on this. Again, thank you so much for being here and we will see you on the next episode. It.