ACCOUNTANT EXPLAINS How Much Car Can You Afford | Avoid becoming CAR POOR

00:00 Intro
00:55 5 Major Factors Affecting Monthly Car Payments
01:50 3 Formulas to Keep in Mind
03:20 Calculate How Much Car You Can Afford

Disclaimer: Note this video is not financial nor accounting/tax advice and should be used for entertainment purposes only. Consult with your own financial advisor, accountant and/or tax advisor for advice related to your specific situation.
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WHO AM I:
Gabrielle is a CPA and Tax Expert, as well as the founder of Balance + Wealth CPA, a licensed CPA firm that specializes in Tax. Prior to starting her business, Gabrielle worked as a Tax Manager at one of the Big 4 Accounting Firms for 7+ years, advising Fortune 500 companies. Gabrielle posts weekly videos on personal finance, business finance, and tax tips.
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[anewjourneywithbertie]

i worked as an accountant in a car dealership and I learned quickly to buy a used car like a Toyota and call it a day

[frustratedmillennialz]

Former car guy here, I left because car culture became who could owe the bank the most. Everyone pretended like they had money...when in actuality, people were even financing car parts!! Sad state of affairs. Most will never admit it, but not everyone should or can afford even an 'average' car of $43k (crazy high compared to pre-pandemic).

[striperkid]

Nearly 90% of drivers on the roads today are "car poor".

[eyme]

I did everything so wrong. SMH. I grew up in a very financially illiterate household. Even though everyone made good money, they spent it like they were dying tomorrow. SMH I’m taking it upon myself to develop better habits and stop this

[jasonl.]

people used to be house poor, now they are even car poor lmao

[Bankaimg]

The average cost of a car now (brand new) is over 45k while the average household income is around 67k. So basically the average person in the u.s cannot afford a new car

[ryangiroux]

One of the best financial decisions I made was deciding to leave car centric society. So much more freedom in places with good options for getting around.

[MXALOVE]

I just think it’s absolutely insane that you need 70, 000$ to afford a 24, 000$ car

[joseCalderon]

Good advice. Don't go alone to the dealership either. Bring a friend, family member, etc to be your second set of eyes and to help you go over the bill of sale, inspection of the car etc. With my base salary of $72k per year, I keep my used car purchases between $10k to $15k. So yeah, new car purchases are out of the question for me personally. I have priorities, like paying off my mortgage, savings and investing. I'm a DIY, so well maintained, proven to be reliable vehicles like Toyota and Lexus with 100k plus miles for me are not a problem. Subscribed

[OhTorch]

Haven’t bought a new new car since 2005. I’ve been buying, repairing, upgrading used vehicles. The most motivating thing about buying a used car outright is the monthly payment. Zero. Because a use vehicle is a on going project, whatever you put into it gradually, it will NEVER exceed the amount of a monthly car payment and full coverage insurance. Unless the motor or transmission goes out. But this means you chose poorly to begin with. Buying and replacing a alternator, a starter, shocks, struts, power steering pump, radiator, etc…. This has been working for me really well. The average car payment in the US is $700 now. Insurance depends on the model you drive, your area, insurer, and driving history. Great vid. Good luck all.

[Tay.]

U can always play with the dealership. Young black guy with barely any fashion sense. Walked in to buy a new car n said I don’t wanna pay anything more than $250 a month. The way they looked at me when I said that was hilarious. They “crunched” the numbers n “lowered” the price of the car to “listing price.” Then I wrote a check for half of it n payed off the rest in a lil more than a year

[worawatsr]

Based on your calculations, 90% of people are car poor 😂😂

[kuruptzZz]

I had $600/month payments on my lexus IS. Since I paid it off, man I feel rich now. Saving so much money. I wouldn't do it again for this reason. I think the best thing to do is save up a few thousand for a down payment, and buy a used car on the shortest term possible where your monthly payments are at most 15% of your monthly next income

[Giardintek]

I have a bumper sticker on my 10 yo Accord saying; "Don't laugh, it's fully paid! and I am happy with it..

[firstname]

Thank you for this tutorial. It is an absolutely essential tool to help keep your finances in check.

[exposingproxystalkingorgan]

Going into debt to buy a vehicle is stupid. Save cash and then buy the vehicle. It is better to buy used vehicles to avoid big depreciation.

[petrthingsilike]

I have never owned a car and I think that was a very fortunate for me. The main downside was not the price tag, you can easily get a car suited to your budget, but the maintenance - insurance, petrol, tires and repairs.
I never needed a car to get to work, and in those few rare emergencies when you needed to get to hospital, I called Uber.
Car’s existence in my life never justified itself.
If I grew up on the country side or countries like US where the whole logistic is build around owning a car, would be different but here in Europe, I never had the need.

[anaveragehuman]

This is presented very well for a "car first" mindset.
I prefer to approach it from a "net worth" mindset. In my opinion, depreciating assets should be at the very bottom of the priority list and instead start with budgeting for critical items like food, shelter, clothing, saving, investing, and giving. A disciplined approach to well funded foundation allows clear headed budgeting for car+fees, entertainment, travel, etc.

[vulpixelful]

Given today's car prices, I would include the down payment in the 35% figure, personally. If you don't have the resource of a lot of cash upfront, you still have the resource of time to save a higher down payment. If you don't have either, that's when you get creative with finding a less expensive used car for now, then start setting aside the savings to replace it.

[MarianoCiancone]

Thanks for creating this channel. What an incredible resource of information.