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In two sentences, finance guy crushes the idea of buying a new car. But people disagree.

Here's why people are still doing it.

via Canva/Photos

A woman gets the keys to her new car.

There are many reasons to be squeamish about spending money in today’s economy. Interest rates are high, trade wars may drive inflation, and financial experts say we may be headed for a recession. That comes after the post-COVID period, when the process of everyday necessities, such as rent and groceries, went sky-high.

There’s a lot of economic uncertainty out there, but that won’t stop some of us from needing a car. And, of course, those are getting more expensive, too. The average car cost $49,740 in January, nearly an all-time high. Part of that is inflation, but it’s also because Americans love buying nice cars, and more are choosing luxury models. So now, to purchase a new car at $49,740, with zero dollars down and a 5-year loan, would cost over $950 a month. That’s a lot of money for something that will only decrease in value.

Real estate expert and author of “Retire FIlthy Rich,“ Ravi Sharma, wasn’t shy about sharing his thoughts about buying a new car on TikTok. The post received over 1.2 million views.

"Controversial topic: That $50,000 car loan that you finally paid off after 5 years cost you $62,000 (due to interest). That car is now worth $20,000 due to depreciation. Losing $42,000 in 5 years would be seen as a bad investment, yet people are still buying new cars. Thoughts?"

@personalfinancewithravi

Controversial Topic - What’s your thoughts about this? 🤔 #personalfinancewithravi

Is it financially smart to buy a new car?

Sharma’s logic is hard to argue with. A car is a depreciating asset that will lose its value over time. In fact, according to Kelly Blue Book, the average new car loses 20% of its value after the first year. That number grows to over 60% after five years. So, why not buy a car that’s five years old, costs less money, and is significantly cheaper to insure?

Strangely, most people in the comments pushed back against Sharma’s logic. "You forgot to factor in the benefit of owning that vehicle and the pleasure of driving it. For most, it's priceless. Not everything in life is about making money," Patty wrote. "I have 3 bad investments and loving them. We only live once. Enjoy,” Rich added. Others noted that even though the car's value goes down, you got use out of the vehicle so it's not a total loss.

new car, finance, ravi sharmaA woman inspects her new car. via Canva/Photos

There were a few people who agreed with Sharma. "Yes! Car payments are one of the top wealth killers. I have always bought used and paid cash,” a commenter wrote. "Amen. I’ve never purchased a brand-new vehicle. If you want to be a millionaire, don’t live like one,” another added. "Just driving the new car off the lot depreciates it by 20-25%. Buying pre-owned, someone else took that depreciation. Don't believe me? Buy a $50k new car then try to sell it tomorrow,” a commenter wrote.

Many people pushed back against Sharma because buying a new vehicle gives them joy. But the real question is, how long does that last before it just becomes your everyday car and no longer has the wow factor it had when you drove it off the lot? Further, going back to our car that cost $49,740 and about $950 a month, what if you bought a car for half the price and invested the $475 a month of the payment in a sensible mutual fund? After 5 years at 6% of growth, that would amount to over $32,000.

new car, finance, ravi sharmaA woman gets the keys to her new car.via Canva/Photos

With the constantly rising cost of living, it’s good to consider what it really means to make a big purchase and whether the joy of something new is worth the loss that comes with spending versus investing. Ultimately, the decision comes down to one’s values and financial priorities. Is short-term satisfaction worth the long-term cost when opting for a used car means more financial freedom tomorrow?

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Internet

Middle class people are sharing how much they have left after paying bills and it's revealing

"You have left over money?"

Photo credit: Canva

Middle class people reveal what's left after paying bills

The economy is a bit of a struggle for just about everyone lately. Everything seems to be more expensive, from everyday essentials to the cost of housing. It seems there's nothing that inflation hasn't touched and the issue appears to be financially crushing the middle class. Throughout this increase in cost of living some families may be feeling alone in their burden of trying to make ends meet when on paper many are earning more than they ever have.

But as people become more comfortable with sharing salaries and financial status, it's becoming obvious that it's not just a handful of families who are struggling. Recently a social media page called Mid-Continent Funding shared a video of a woman sitting at a computer with text overlay that reads, "just curious how much money everyone had left over each month after paying for all their bills, mortgage and necessities. I've got about $72 and I'm debating on if it should go to retirement, savings or food."

The woman in the video appears to be a mortgage broker bravely sharing that she is also struggling with making ends meet. This theme is something that has become a normal struggle for middle class families. According to a 2024 Bank of America survey nearly 50% of adults report living paycheck to paycheck while 2024 Bankrate surveys report that only 27% of adults say they have an emergency fund.

Tax The Rich Stock Market GIFGiphy

"Roughly one in four Americans with credit card debt (24 percent) feel less confident in their ability to get out of credit card debt now than they did at the beginning of 2022. Furthermore, about one in six (17 percent) worry they might not be able to make their minimum credit card payment at some point in the next six months," according to another Bankrate survey completed in 2024.

There's also another factor to consider when looking at the squeeze middle class Americans are feeling, the income of middle class families hasn't risen at the same rates as upper income families according to Pew Research. So while people are earning more than they have previously, their earnings are not increasing as quickly as those in the tax brackets above them. This means post covid inflation is absorbing any extra income they may be bringing home and people are feeling it.

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Viewers of the video asking how much money people have left after paying their bills responded with eye opening results that give a glimpse into how folks are fairing. The revelations also serve as a reminder that people are not alone in their financial struggles.

One person writes, "Left over? We're supposed to have that??"

Another says, "you have left over money? after bills I don't even have enough to cover meds and groceries."

A different person says they only have $11 left to last until the next paycheck while another commenter admits to overdrawing her account every month.


@midcontinentfunding Just curious. #mortgage #homeowner #homeownership #firsttimehomebuyer #finance #bills ♬ sad SpongeBob music - michael

Someone chimes in, "It used to be thousands now I’m always waiting for our paychecks to hit our account," with another person replying to their comment offering solidarity, saying "legit same here. nothing has changed, actually make more than we used to, yet scraping for pennies every check nowadays. idk how people do it."

Saving money for an emergency fund or freeing up money so you'e not living paycheck to paycheck may seem impossible but credit counselor and head of community at Self Financial, Inc. Monique White shares a few tips with NPR that people may find useful. One of the first tips she shares is to contact your creditors to see if they can lower your monthly payments or lower your interest rates to help free up monthly cash.

Episode 12 Snl GIF by Saturday Night LiveGiphy

First Financial Bank advises people struggling with finances to participate in weekly money saving challenges, use money saving apps, make grocery lists, utilize rebates and shop in bulk. The prospect of looking at your personal finances just may make some people queasy but hopefully a few of these tips can be beneficial to someone's financial situation.

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Family

People helped a dad explain his 'cheap' grocery purchases to his 11-year-old daughter

There's nothing wrong with buying generic products instead of brand names.

via Karolina Grabowska/Pexels

A dad with $5 in his wallet

Even though parents may try to shield their children from tough topics such as economics and social status, they develop their own sense of them as they age. Studies show that children as young as 5 know the difference between being poor, middle-class or wealthy.

By age 11, children are fully conscious of brands and see them as the “dominant feature in their product categorization compared with other perceptual attributes.”

A father was recently embarrassed by his 11-year-old daughter at the supermarket when she called him out for buying generic products instead of brand names. He shared the story on Reddit’s Mildly Infuriating forum, where many commenters shared advice on teaching preteens about household economics.

The post is probably relatable to a lot of parents who’ve had to tighten their budgets given the steep rise in prices over the past few years. When prices go up and your wages stay the same, providing for your family becomes even more difficult.

“Been food shopping with my kid for years. She's 11 now and has developed an opinion on everything. She questioned me on why I buy Pricerite (generic) brand items over brand name. I explained when you only have $100, you can't use it all up buying brand name foods, it goes further if you buy items at a good price,” the father explained in his post.

Even though the daughter seemed to understand her dad's point, she made fun of him to the cashier while they were checking out.

“Five minutes later, when checking out, the cashier greets us, ‘How are you doing today?’ my daughter replies, ‘It could be better. We can't eat brand-name food 'cause my dad is cheap... cheap like a bird.’ And flocks her arms and goes cheap cheap cheap cheap,” the embarrassed father shared.

A group of commenters stepped in to help the exasperated father teach his daughter how to make sound economic decisions while giving her a lesson in manners.

“Next time shopping, have her bring a calculator and put in the name brand prices for each item. Then when she gets to $100, say if we bought the name brand, this is all we would be getting, since we aren't, I can get more food,” SnooWords4839 wrote. “Hang in there, kids sometimes need visual aids while learning.”

Another commenter thought it would be a good idea for the child to learn generic and name-brand products are often quite alike. Maybe that way, she’d understand that her dad isn’t just frugal but smart.

“Do a blind taste test sometime between generic and brand name,” Tubagoat suggested. “And ask her why someone would pay more for something that tastes exactly the same. Then when she thinks she's getting wise to your ways, blindfold her and have her taste two of the same store brand samples.”

Another person suggested a real-world way to teach a child about spending is by comparing cereal that comes in a bag versus the type that comes in a box.

“I once gave my kids $5 each to buy their favorite cereal (this, of course, was when name brand cereal was about $3 a box) they were happy to have their favorite name brand but quickly realized it didn’t last as long as the bag cereal mom buys,” ColorMeSlowly wrote. “They were disappointed and never asked for their name-brand cereal again.”

Another commenter believed the real lesson the daughter should take from the exchange is about respect.

“This is not about money, this is your child being absurdly disrespectful to you,” Luxxielisbon wrote. “Even if you were cheap and not budget conscious, that’s still your decision (assuming of course children are not being neglected). I would never presume to tell my parents what to do with their money. When she earns her own, she can decide how to spend it.”

Making it through hard times is an exercise in resourcefulness but also one in character. It teaches us to be resilient, adaptive, gracious and, most importantly, humble. For parents, hard times can also be a way to impart those tough lessons to our children so they can navigate the tough times in their lives with grit and grace.


This article originally appeared on 8.22.23

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Joy

Woman brings her own avocado to a restaurant because that's what today's economy is like

"I feel this because they charge about $6 for that."

via Stock Catalog/Flickr

A woman presents a lovely avocado.

When you’re living in 2024 but want to spend money like it’s still 2019, you’ve got to make some significant lifestyle changes. Studies show that the cost of eating out at a restaurant has increased 25% since the COVID-19 pandemic started in 2020.

In addition to your meal being more expensive, a growing number of restaurants are adding “service fees” to your meals at check out, and the customary 15% tip has now gone up to what feels like 20%.

That’s why a TikTok video by vegan fitness influencer Jasmine Pineda has many people grinning from ear to ear. In the video, she proudly brings her own avocado and a knife to a restaurant. She cuts the fruit and adds it to her meal to avoid paying the $3 to $6 avocado upcharge.

The short and sweet video sums up what many people have to do to get by these days.

The video was a hit on TikTok, receiving over 200,000 views. “This is the smartest thing ever!!! Why didn’t I think of this? Thank you, girl, lol,” ColorMeMonique wrote in the comments. “Super smart, honestly. These places charge too much for avocado!” Ashley added.

Some people admitted that they bring their own food to restaurants all the time. “I’ve brought my own salad dressing… and even my own toasted bread at breakfast,” Jen wrote. "I have brought my own lettuce to Mexican restaurants," Jo-Lei added.

Why does it cost extra to get avocados or guacamole at most restaurants?

There are a lot of reasons why there’s a hefty upcharge for avocados when you are eating out. According to Mashed, a big problem is that the cost of avocados is constantly in flux. “Avocados are a very demanding crop when it comes to water and requires around 50 gallons of H2O per pound of fruit,” the site wrote. “If California or Mexico are experiencing bad weather, it can dramatically affect the crop and raise prices. A restaurant might pay $40 for a case of avocados one week and the next week, that same case might be $90.”

Another big reason for the price hike is that avocados have a short shelf life, so restaurant owners always have to throw them out. Further, they turn brown when left out too long, which isn’t very appetizing for most diners.

"For restaurants and others that produce guac at a mass scale, you may be throwing out literal tons of guacamole," Michael Alexis of The Great Guac Off Competition told Reader's Digest.

We all have to do what we have to do to get by during hard times, and Pineda’s TikTok is a fun way of showing people a creative way to stretch their dollar while also enjoying the good life by going out to eat. It feels like a bit of a taboo to bring food and cutlery from home to a restaurant, but what’s the restaurant going to do? Kick her out after they already brought her some bread and a salad?

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