EPS 45 - The $50,000 Truck and the Price of Vanity

Jerry opens Season 6 with a timely reflection on self-worth and spending habits. Inspired by a tire blowout and a chat with a fellow driver, he explores how the cost of vehicles — and vanity — can derail financial goals. Through practical budgeting rules and a clear explanation of opportunity cost, he shows how redirecting money from depreciating assets toward investments or emergency savings can transform your financial trajectory.

The episode wraps with updates to the Pink Money Podcast website, including the launch of Jerry’s Playlist, and closes on a message of empowerment: the real symbol of success isn’t the truck in your driveway — it’s peace of mind in your bank account.

💬 Have a question or comment? Contact Jerry here

Transcript

SPEAKER_00: 0:00

The following podcast is for entertainment and educational purposes only. Remember to seek competent tax, legal, and investment advice that is unique to your personal situation. Hey, hello, hello, hello, and welcome to the Pink Money Podcast where we talk about all things related to money from a gay perspective. And first off, I'll say happy National Coming Out Day. So that's pretty cool. It's always in the month of October, and today it's uh October the 11th. So hopefully you're already out and about and doing great. And I wish you all the best. And if you're not, then maybe make plans to come out. So talk to someone that you know, and like I said, just kick the door open and be your true self. That's always the best way to be. So, you know, what I was thinking about today and what I wanted to talk about is I ran across this guy, and we just struck up a conversation, and he mentioned me, you know, at the discount tire where we were both at, that, you know, had a tire that actually blew out while I was on the road. It was kind of creepy, but I thought I'd ran over this huge chunk of metal. I don't even know what the hell I ran over, but anyway, it just blew like you see in the movies, like boom, and next thing you know, flat, flat, flat, flat, flat. Anyhow, I mean, on my vehicle, a new tire cost me 260 bucks, and I have a 22. And he on his vehicle said that he was spending over$600 for a tire. I mean, I I couldn't believe it when he told me that I said for a single tire, he said yes. And I'm like, is it what do they have hydro hydrogen or whatever in it? He's like, no. I'm like, I I I can't even fathom paying$600 for a tire. I mean, to me, that's just outrageous. And he said it was some type of Volvo. I don't know, it was wife's Volvo. So regardless, I'm like, there would be no way, no way I'm gonna pay$600 for a tire. Just never, never, never, never. And nor would I pay like$50,000,$60,000, some odd$70,000 for a vehicle. I mean, I just wouldn't. I think back, I guess the reason I say that is because I think back to when I bought my first house. Of course, now we're talking 1999, so quite some time ago. But I bought my house brand new, sticks up, and it's a four-bedroom, 1700 square foot home. So kind of on the small side. But anyway, it cost me$115,000. So buying a 15, I mean a$50,000 vehicle, I just really can't imagine that. Again, you really have to have the income to support buying a$50,000 vehicle. And you know, when you're talking about in pure financial planning terms, you should be spending no more than 12 to 15% of your income on a vehicle. And if just if you're following traditional financial planning, budgeting rules of thumb, about 30% is going to your housing costs, and like I said, you should be putting money aside for yourself, at least 10%, that's ideal. And then spending no more, like I said, than about you know 12 to 15% on your vehicle. And it's difficult, I know, because it you're not gonna have that fifty thousand dollar truck sitting in the driveway, right? I mean, to afford that price of a vehicle, you'd have to be earning around a hundred and six, you know, thousand a year. And if you and your spouse are, you know, both collectively working, then combining your incomes, you know, you might be about at a hundred and six thousand, but that is just probably not the real case for a lot of people, right? But it could be, you know, I don't know. But what I really think about is the depreciation of that vehicle and really what are you getting for it? Because it's nice to have a new truck in the driveway, right? I mean, no, no doubt about it. But I remember I sound like the the old man, hey, get off my lawn, you know, kind of guy. But what I'm just thinking of is I remember when a Ford F-150 costed about$16,000. So in my mind, that's still how I see them, as you know, relatively inexpensive vehicles. To pay like$50,000,$60,000 for a truck, I just it's mind-boggling to me. Because again, at today's current interest rates and the way that most people are are financing these vehicles today, I mean, you're talking about a 7% interest rate sometimes, of course, depending on your credit and the place you know that you're able to get a loan from. But if you're paying 7% on a vehicle that's just depreciating faster than you can think straight, no pun intended, but you know, you're just you're really losing out in the long run because you're never really gonna get ahead. And that's really a struggle. And what the problem is with that is you have what's called opportunity cost, and that's just saying you missed out on opportunity and what does it cost me by failing to uh take advantage of this opportunity that's in front of me, and it really comes down to just pure dollars and cents, because if you took that same amount of money on that fifty thousand dollar F-150 and you invested it, let's say, in the S P 500, if you started today, and even if you just went seven years of investing, like I said, instead of buying that truck and spending the next seven years paying it off, then if you put that into the S P 500, which returns has historically returned, you know, let's just say around 10%, then you'd have about$145,000, you know, in the in real money, right? And of course, you know, that's what they call unrealized gain, because in order to get that$145,000, you'd have to sell your shares and cash out, which you know you don't want to do. But anyway, that's just a big difference, right? That's a real big difference. And a lot of times what a lot of people think is that, well, you know, I could probably swing that, it'll be tight, but if I get my bonuses, if I get uh my year-end tax return, and they start justifying, you know, the purchase of this vehicle, and they think, you know, let's just go ahead and do it. Like I said, it'll be tight. But then, you know, do you even take into account all the other parts that go into you know buying a vehicle, meaning or having a vehicle, I should say? Um, because you're looking at you know your monthly payment, then you're looking at insurance, the cost of gas, you know, the cost of maintaining this vehicle. And that just pushes, let's say, on a 50K truck that the monthly payment is like 850 bucks, with the monthly expenses ranging around$450, you're really spending about$1,300 a month. And if you look at that over the course of seven years, that's really a hundred oh, like around$109,000. So would you rather give all that money to the bank or would you rather, you know, have that money set aside for you? So that's really the opportunity cost here. So while you got a nice shiny new truck sitting in the driveway, really you should be spending um a lot, lot less on a vehicle. Something half of that, you know, around$25,000 is what you should be looking at. Now, a lot of people are gonna say, you just can't find a vehicle like that. Well, you you probably can if you look, right? I mean, it may not be again your dream vehicle, but it's certainly better than losing out on such a huge amount of money. And investing is one of those things that happens slowly, but also seems to happen fast. You know, as you age, and if you're in your 20s now, you're probably thinking this isn't really how it works for me, but as you age, time just goes by so quickly. It just really does. It clips and clips and clips and clips along, and next thing you know, a decade has gone by, 20 years have gone by, you know, 30 years has gone by. And next thing you know, you know, just what you had been thinking wasn't growing or doing much, when you really look at it, you're like, wow, that's crazy, you know. I mean, even like this house, I've lived in this on and off, you know, for for years and years, but I've always had it. And this house now in today's market, I think is valued anywhere between I'll just say 400 to 600. And that just really depends on the market, right? But that's only if you're planning on selling. But the other things you have to think about are, you know, are like property taxes, et cetera. But you know, around here anyway, and I'm talking about like in Austin, Texas, if you rent an apartment, I believe the average rent right now, I'm not sure if this is a one or two bedroom, but anyway, it's around$1,400, I think. And if you got a two-bedroom, I mean, that's gonna push you up to$1,800, maybe$2,000. So that's just a lot of money. And so, again, if you're looking at trying to keep yourself within these ranges, you really want to try to find the best of all these worlds, meaning you only have so much money and you need to budget it accordingly, and you need to save for yourself and invest for yourself so that you don't end up in this paycheck by paycheck lifestyle, which is practically impossible for a lot of people to break out of. Because again, if you're sitting there justifying buying this 50k vehicle, and you're again trying to come up with these ways that you can afford it, you can't afford it then, right? You do you really can't. And at these current interest rates, you really don't want to. And this vehicle is just gonna depreciate so fast anyway, that it's really not gonna be worth what you think it's gonna be worth, and it's not gonna look like it looks today in the long run either. And that's disappointing because again, you've spent so much money on it, but it really hasn't done you much except for to help get you from A to B. But you could do that in almost any vehicle, right? If it runs, and you could find used vehicles, and I know that even in today's world, they're kind of expensive as well, but I mean it would be far in a way better for you to buy a used vehicle typically, and then to buy a brand new vehicle, again, uh, especially at a price that you really can't afford. So I'm not gonna harp on that. I think you get the point, but I'm just saying it's shocking to me the cost of vehicles today, and as high as interest rates are today, that people are having to take out a loan. And it used to be standard loans were between four and five years for a vehicle loan, and now they're pushing six, seven years, if not, I don't even know if they're going out eight, but there would be no way, no way I would even consider going out seven, eight years on a vehicle. No way, no way. So if you can't afford to pay cash, that would be the best way to get it, right? But if you can't afford that and you finance it, of course you look for the lowest interest rate, and hopefully your credit is strong enough that you can, you know, get a really good interest rate. But if not, if you just have standard, you know, average credit, you might be looking at a 7% rate instead of something like a 4% interest rate, and that's going to be hurtful to you. So those are all the things you want to take into consideration before you really sign that dotted line. And I know the pull when you go into these lots and you look around and it you go out on the street and your friends all have one, but you know, is it just for vanity or who are you really trying to impress? You know, I I don't know. Keeping up with the Joneses kind of mentality is not worth it because that what's really attractive is financial security. That's what's really hot, right? So if you know someone who's got, you know, not even a lot of money, but they're financially secure, you're gonna find that person a lot more attractive than somebody who's barely scraping by or again in a paycheck by paycheck cycle, because that's probably an indicator that they're not financially savvy with their money and maybe they don't make the best decisions. So that could work against you as well. So you want to put out confidence and assurance that you know what you're doing and you handle your money well, and that you are financially secure. So if someone that you like and you know they're doing well, the two of you that get together and then you're both doing well, that's great. And you don't need to spend your money to support somebody else if you don't have to. I mean, why do that? Anyway, not gonna beat that horse. But what trying to say all in all is you're better off following these budgeting principles and practices because you do always, like I said, going back to the basics here is keeping your debt low and building an emergency fund for yourself first. And if you're juggling a lot of debt and you don't have an emergency fund, go back to the basics here with me and just start reorganizing your finances and prioritizing them so that you can create a strategy to pay down your debt and you can also pay yourself first and you can work to build up that emergency fund. And when I say an emergency fund, what I'm really talking again about is having liquid money that's ready and available. So that typically, let's say you just have it in a regular savings account, even a high-yield savings account, whatever, as long as it's available to you and you can get to it when you need it. Now, I've I've had people in the past tell me I don't really carry cash or I don't have cash just lying around. I put all my cash to work for me, and my credit card is my emergency fund, or you know, I have my investments, and if I need to tap into them, I will. And I mean, there's pros and cons about all that, but I would say you really can't trust the stock market either, in the sense that if your money's all tied up in it. And we have seen real life examples, 2008, you know, when the market has gone severely south, and then your investments have gone down as well. And do you really want to cash out at that time if you need it when the market set is lowest? No, right? I low, sell high. You want to cash out when the market is doing well. And you don't have to worry about cashing out in the market if you have a solid emergency fund, ready available liquid cash that you can just tap into when you need it. And that's really the better place in my mind. So liquid means different things to different people, but even some people consider you know a certificate of deposit liquid. But if you have to break into that thing and you pay a penalty for breaking into it, then is it really, you know, liquid? I would say no. Now, I know a lot of financial planners in their calculations take into account, you know, a lot of different things that they consider liquid. And, you know, I guess that's up to them. But, you know, I that's not exactly how I would see it. But again, to each of their own, whatever. I'm just giving you just some my thoughts and what I usually recommend when I'm talking with somebody and recommending, you know, how what they should do with their money. Well, of course, always put it in an FDIC insured account. If your bank goes belly up, you know, that's the last thing you need is to lose all your money. But as long as it's FDIC insured, you're good to up to$250,000. And if you and your spouse have an account together, then you're each sure insured up to$250,000. So that's a nice problem to have, right? If you've got to that level that you don't have to worry about, I mean, you start to worry about, you know, is all my money insured? And then you just have to move money around or think about other ways to title your assets, like in a trust or, you know, payable on death and things like that. But nevertheless, my point really is not so much about FDIC insurance. What I'm really trying to stress here is that you should pay yourself first, build that solid emergency fund, and do not buy a$50,000 Ford F-150 if it doesn't fall into your budget. Again, if you're not making like$106,000, and even if you are, I would suggest again buying a good vehicle, right? A nice vehicle, but one that can get you from A to B. And as long as you know you keep it clean and you keep it running well, then I wouldn't care what my neighbors think, really. And I I wouldn't try to impress anybody because it's really not impressive when you're struggling. And I was even reading, I think recently, that the repossession rates are at an all-time high since 2009. And that is crazy to think about as well. So that means that a lot of people are defaulting on these loans because whatever circumstances have changed and they've gotten behind on their payments, and next thing you know, the bank is like knocking on the door and saying, Give me the keys. So then what have you done for yourself? Absolutely nothing. So you just lost a whole bunch of money and you haven't put one foot towards creating financial security for yourself. So that's also very, you know, stressful on your relationship if you're in one, because nobody, nobody, nobody is gonna find somebody who's on the ropes financially attractive. It's just not. And if one thing leads to another, meaning you have your truck repossessed, then it's gonna be very difficult, difficult for you to get to work, and that could put your job in jeopardy. And next thing you know, you're late for work, you start missing work, and then you get written up, and next thing you know, you're fired, and then you're really in trouble, right? So don't do it. I know this is you know sounding preachy, but what I'm really just hoping you take away from this is a look at your own personal situation and finances. And if you have made some, maybe not the best choices right now, and you are sitting in a F-150 that you just paid 50k for, and you're now starting to have regrets about it, really consider selling it right now. While the value is relatively high and the economy is relatively good, the bottom can fall out of both things quick. And so you don't want to get yourself in that situation. So sometimes it is difficult to pull the trigger. And I even hate saying that because of these recent events that have happened, but nevertheless, my point is that you want to make the right decision and get out from this vehicle and buy a more reasonable vehicle, and just even if you have to take the loss, just chalk it up to hey, that's the way it goes. Okay. Anyhow, that's really all I wanted to say about that. This is my first episode of season six, so that's kind of cool. There are some new things on my website. It is the pinkmoneypodcast.com. And if you notice at the beginning and the end of the episodes, I have changed the intro and outros, steer clear of the hated, you know, copyright police, etc. But you know, I can I can understand that. You know, if you create a work and you want to get paid for it, and that's how you get paid by you know people who play it, pay it. And so what I did do is I created Jerry's playlist on the website. So it is a way that you can still listen to some things that I find enjoyable, fun, and I think just danceable. It's kind of my the kind of the the type of music that I lean to, but besides 50s music when I'm cleaning house, but you know, uplifting music to me is some of the best music because you can cry yourself to sleep every night if you want to, and certainly who hasn't listened to Patsy Klein, you know, over and over and over when you're crying buckets of tears over a relationship that's gone south. But if let's say you don't want to do that or don't have to do that, then you know, listen to something that's more fun, right? Why not? So there's some other things that I've released on the Pink Money Podcast website. So dig through it. Hopefully you find it interesting. Comment to me, send me a message if you have some feedback or maybe you want some advice, run your scenario through me. I'd be happy to help you out to the best of my ability. You know, as always, like I always say too, you know, find yourself a good financial advisor, tax advisor, lawyer if you need it, and lean on the professionals when you really find yourself struggling and maybe you haven't made some of the best decisions, or you want to make the best decisions, those would be good people to turn to, right? And just find someone who identifies with you, like I've always said, and sometimes they're hard to find. But anyway, I hope that you enjoy the rest of your day, and I will talk to you next time.