Spend Wisely.

Subject A buys a new vehicle for 23k because they assume a new car with no miles and a warranty is better than a used one that runs very good and it’s a better investment than the older car they were driving. It’s brand new, and you know, that is supposed to feel good.

Subject B keeps driving their vehicle they paid off, sure it’s older but they kept up the general maintenance and if the car needs some maintenance that’s a trade off for the expense of a monthly loan payment for it.

Subject A buys the new car and feels great driving it off the lot. But the car just looses a couple grand of its value with being driven off the lot. It also loses over 30% of its value within the first 3 years.

Yet Subject A is paying a 5 year loan for this privilege of owing A BRAND NEW vehicle, that, ummmm, loses damn near half it’s value before the loan is paid off.

Subject B invests their former car loan payment of $450 in a Roth IRA or Traditional IRA which equals out to $5400 a year.

The average return of investment of their IRA is 9% annually with that compound interest their money is growing at a healthy rate.

After 5 years the time Subject A has finished paying off their so called smart investment they have lost a considerable amount of money, on their now used car.

Subject B looks at their IRA, sees it exceeds well over 33k and is stoked on how compound interest is rolling into a much bigger snow ball of gains than when they first opened it. At such a rate that the interest made yearly is neering exceeding their yearly contributions to it. They shake their head at the thought of a few of their friends who have just purchased brand new loaded SUV vehicles for 30k, vehicles they didn’t need.

Subject B HAS the investment. Subject A has a problem if they thought theirs was one.

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