Friday Aug 12, 2022

Ep 021 - Buying a Car

Summary:

  • Trevor’s Main Goal Out Of Residency – Pay Off Loans [0:01:35]
  • Financial Advisors Are Accountable, To Some Degree, For Our Financial Decisions [0:04:19]
  • Trevor Wants To Buy A New Car And Consults With Jon [0:06:03]
  • Trevor Found His Car! [0:10:20]
  • General Rule Of Advice: Buy A Two- Or Three-Year-Old Car [0:11:04]
  • Process For Buying A Car These Days [0:13:46]
  • Financing: What Are The Options? Interest Rate? [0:19:26]
  • Extra Important Tips In Buying A Car [0:26:02]
  • Cars That Depreciate The Least Can Be Part Of Estate Planning (Long-Term Care Planning) [0:27:32]

 

 

Welcome to the Financial MD Show. This is the only podcast designed specifically for residents and young physicians to help you become educated on financial planning for physicians and avoid many of the common financial mistakes doctors make. Your hosts, Jon and Trevor, explore a different topic with each episode. Jon Solitro is a financial planner and certified financial education instructor. He’s been working with young physicians for the better part of the decade and lectures to graduate medical programs around the country. Dr. Trevor Smith is a board-certified ophthalmologist with a full-time practice and he has learned the ins and outs first-hand what it takes to make smart financial decisions as a young physician. And now here’s your hosts, Jon and Trevor.

 

Jon: Alright, welcome to another episode of the Financial MD Show. We’re back and ready to talk about what’s relevant today in finances for young physicians and sometimes there’s very specific things that apply to you and sometimes they’re things that just apply to everybody. Like, for example, today’s topic of buying a car is something that applies to everybody. Now, certainly, when you get out of residency that’s when most doctors are definitely looking to buy a car. I don’t know about you, Trevor, but what was that like? Was that your new car purchase when you got out of residency or fellowship?

 

Trevor’s Main Goal Out Of Residency – Pay Off Loans [0:01:35]

 

Trevor: No. My goal was to pay off my loans. I was pretty aggressive on paying off my loans. I keep the same car I had in residency until it was totaled last year. I had a nice trip to Florida, flew back, snowstorm, driving home from the Detroit Airport, and there was a 19-year-old kid in a brand new 2021 Chevy Blazer, bright orange, just ripping down the right lane going about 80. Everyone else was going like 60 or so – really heavy snow condition – people from Michigan would know. And he just started spinning around in front of everybody. He hit an off-duty police officer first and two other cars including my own and so, yes, that car was toast.

 

Jon: How old was he?

 

Trevor: I didn’t get his exact age but he looked like he’s probably 19. I mean, he looked younger than 20. It’s possible that he was a little older than that but, yeah, pretty crazy. So I kept my same car. I just was like, you know, I like this car. It’s a solid car. I got a wicked deal on it in residency; didn’t really have many repairs. So I waited, but then I’ve just kind have been like bouncing around because that was still during COVID, you know, a year ago, that was 2021. So cars were like crazy so I just bought the cheapest used car I could find with good gas mileage and I have been driving a 2005 Toyota Prius for the last year. The air conditioning doesn’t work.

 

Jon: You started to feel that an hour or two.

 

Trevor: Oh my gosh, I hate to admit how much it drives me crazy not to have an air conditioning but when it’s like – you know, it’s humid in Michigan. So the heat’s one thing, but humid, it’s brutal.

 

Jon: I know, yeah.

 

Trevor: So, it’s windows down. It’s loud. I replaced the rear shocks. I just have been putting a lot of money into it. I’m like, this is crazy. So, yeah, what prompted this pod here, right, was I was like I’m going to buy a car and the funny thing about people even if they have financial advisors, they’ll usually buy a house or car and they’ll be like, “Hey, I just want to give you call, just a head’s up, financial advisor; I just bought 80,000 dollar Audi,” or something like that, and, like, “Oh cool, is that part of our plan that we put together?”

 

Jon: Oh my gosh, that is the same conversation I’ve had. I think folks what you’re hearing is Trevor’s been with us long enough to know what the quick and the dirty side of financial planning that nobody tells you. I’ve gotten to the point where I’ll put it in writing with clients before like please let us know of any upcoming financial changes or large purchases or any of that kind of stuff. I think sometimes they don’t think about it but I know there are some times where they didn’t want to tell me.

 

Financial Advisors Are Accountable, To Some Degree, For Our Financial Decisions [0:04:19]

 

Trevor: It’s really funny. Definitely, financial advisors are, to some degree, they’re like accountability for our financial decisions, you know.

 

Jon: Well, for sure.

 

Trevor: Like if you eat terrible and you start getting a belly and you still go to the gym and you got a trainer, you know, he’s going to be like, “Hey, we have been working at this like what’s going on.” You know like, “Are we achieving your goals? We can adjust them, but you know, this is what we said we’re going to do, so what’s the plan here?” It’s incredibly valuable to have that person to be able to check in.

 

Jon: Yeah, not that it’s not flexible but I’ve always said half the value of financial planner when I talk to people about how much it costs monthly to work with Financial MD or any of that kind of thing, they always think, “Well, what’s the value that I’m getting? Are they going to save me money? Are they going to make me more money because I work with a financial planner?” Well, probably, but it’s going to be intangible things that we can’t track because half the value of working with a financial planner is the accountability and we almost call it a financial coach so people can get that concept a little better.

 

Trevor: Yeah, totally.

 

Jon: I’m going to tell you to do stuff. I’m going to expect you to do it and when you don’t, I need to hear about it or that kind of stuff and, yeah, you’re totally right and I hope everybody listening to this, whatever the point is you work with a financial planner, if you’re disciplined enough to do it yourself, great, but that’s not the majority as the White Coat Investor says that 5 to maybe 10 percent of doctors are legitimate do-it-yourselfers and should be. The rest need to get some help and you need that accountability. I tell people this. This isn’t information that’s proprietary to me. I’m not some brilliant storehouse of knowledge that nobody else has. I have a lot of knowledge but it’s not stuff you can’t just Google either so why do you need a financial planner. So there you go. That’s my rant.

 

Trevor Wants To Buy A New Car And Consults With Jon [0:06:03]

 

Trevor: Yeah, exactly. I mean, I totally agree. Yeah, so that’s why I reached out. I was curious of what are your thoughts, what do you talk to about clients with cars because I’m about to buy a new car. I want to replace the one I have – well, I’m still going to keep it around as a backup because I basically repaired everything that needs to be repaired. It’s got 200,000-plus miles on it like it’s fully depreciated. It’s perfect. It’s a great backup car to just keep around, barely cost me anything on insurance. It’s sweet, and my family can use it – siblings, parents, whatever – running to the airport. It gets great gas mileage so I’m like, okay, I’ll just keep it around. It’s not worth trading in or even selling. But I want to upgrade something that I can kind of be a nice commuter car that’s more comfortable and just something nicer like I really focused so much on my loans that I’m like when I’m going to ever buy something that I like? Like just for me to enjoy because that’s supposedly part of the reason we make money but I’m kind of bad about spending money on things that I can just use that don’t have an explicit investment purpose; you know, growth plan. So I could just drive this thing forever into the ground and save some money here and there but I really would like to do something, you know, and get something nice that I enjoy that’s just fun and comfortable and easier on my back and stuff. I’m not that old but I’m getting old enough that I appreciate a comfortable seat if I’m driving a lot, you know.

 

Jon: So like back in the day are you like the Lincoln level, like Cadillac, like you want that nice, smooth ride?

 

Trevor: Yeah, so I’ve been prioritizing like a smooth ride and comfortable seat like good back support. The Prius that I have doesn’t even adjust up and down. It only adjusts back and forth. So I hadn’t been in a car like that in a while when I bought this one. So, you just end up at the same height, you know, no matter where you’re at. It’s just tough, yeah.

 

Jon: We’ve always been an old soul.

 

Trevor: Yeah, and the body catches up, right?

 

Jon: Yeah.

 

Trevor: That’s what I’m looking for and when I called you I was just like let’s make sure this is kind of what I have in mind. I’m thinking about a car payment in the range of 500 to 800 or something. Get something that’s 60- to 70-something a month amortization, the lease period, and that will get me in the range of 700 to 850 or so. The going rates for the insurance – sorry, for the loan – the interest rates are 3.5 or 4 percent, maybe higher depending on your bank and all that, but I’m getting quoted like around there. good credit is like 730-plus and I’m set on that. So, none of this obviously is bragging, I don’t know. I doubt that sounds like bragging to say my credit score is over 730 but I just want to be clear. I don’t’ really care. I’m not trying to sound like fancy or cool or anything. I’m just saying, here’s my example, you know. Four months out of residency, I paid off on my major loans. I want to drive something a little bit nicer and just enjoy that. I’m coming from the flip side like I’m having a hard time letting myself spend a little bit of money, so I’m finding, because I’ve been so nose down, pay off as much as possible my debt, and now I’m like, “Oh, is it okay if I don’t buy a Toyota,” you know, and it’s kind of almost like a psychological process to walk through like, “Oh, but this costs a little bit more,” and then I look at the miles per gallon for luxury cars. They’re not as good as like a Toyota Hybrid or like a Lexus Hybrid. I’m like, “Oh, it’s going to cost this much per year in gas and if gas doubles in price, it will be even more proportionally.” But at the same time like, you know, what am I working hard for and making money for, you know? So if I’m not going to spend it sometimes on something that I enjoy, it’s like, man, what’s the point, you know.

 

Jon: Well, my normal answer is you’re making more money to buy more Bitcoin.

 

Trevor: Yeah, right, right, right. That’s my normal answer, too, and I do love that perspective but you know what? Bitcoin goes down and up, right, so I think I’ve got a pretty rational regular plan on my investing and I got that portion of my income set aside so it’s like, well, I can do that. I don’t really want to buy a home and investment properties. I mean that’s investments – all that stuff. I keep thinking, oh, I could do more investments. Well, I’m already doing investments.

 

Jon: Yeah.

 

Trevor Found His Car! [0:10:20]

 

Trevor: I’m already being responsible. So, anyway, I don’t want to be too redundant but that’s kind of in the process. I found a car I like and now I’m just going through the, you know. I know the exact payments that’s going to cost. I just got quotes on the insurance and I compared the Toyota Hybrid car to this other kind of more like luxury car. It’s still not German. It’s still one of the lower cost ones but it’s like the Hyundai sub-brand Genesis. I’m like, “Oh, these are cool.” I kind of like the look of them. They’re a little more comfortable but they’re not like the cost of a Mercedes E-class or a BMW 5 Series or something like that and the maintenance won’t be quite as expensive. So I’m still being like very financial about it even if I’m trying to make more of a fun decision.

 

General Rule Of Advice: Buy A Two- Or Three-Year-Old Car [0:11:04]

 

Jon: So what’s the – I mean we’re going to talk about a couple of different things here in terms of what’s normal advice for buying a car and then what’s it like these days and how do we have to tweak that a little bit. Normally, when we’re looking at a car, I mean, general rule of thumb that I would say to anybody that can and I would say, you know, this is one of those Dave Ramsey would probably agree with – don’t buy brand new car. I think people know that in general but these days that may have changed and be a little bit different. Because the used car market is so tight and unprecedented and just availability and all those things, we may have to re-look at some of those things. General rule of advice? Buy a two- or three-year-old car, pay cash for it, but we’re still in a fairly low interest rate environment. You know, good two- or three-year-old cars are nearly as much as a brand new car so we’re getting one of those weird times where conventional wisdom doesn’t necessarily apply as much. Back in 2004, the government came out with this cash-for-clunkers deal like they were short on – I can’t remember what it was. If people were getting part of scrap metal, there were some issues there. There was just – I don’t remember what it was – but there was a- maybe it was to help the car industry or something like that but they did this Cash for Clunkers where the government was giving a certain amount for no matter what shape your car was in, you were getting money for these used cars and so that bumped up the used car price quite a bit and I ended up buying a brand new car for the first time because for like, you know, a few thousand more, I got the full warranty and a brand new car and all that kind of stuff. I was like, yeah, that kind of make sense.

 

Trevor: Yup.

 

Jon: But we’re kind of in an another time different reasons but similar outcome and things kind of have to go out the window. Yesterday, Trevor and I talked a little bit about how much of your- so let’s say you’re not paying cash, how much of your budget should be going towards this? So, he and I talked about student loans. We talked about other outstanding debt, if any; other payments, and one of the big things that I talk to any resident and any physician that I’m doing a budget with is what is the percentage that should be going to any debt – car payment included. So, all told, generally, 45 percent is what you want to be allotted; no more than that. I’m not saying that’s your goal. You won’t get up to that point, but that’s kind of the limit where you’re safe. So, 45 percent for any debt, that’s of your gross income; 25 percent of that is usually housing payment; again, these are maximums recommended. So, that being the case, we talked through some of that but that’s still, you know, I think the environment is still the same for something like that today. So, walk us through, Trevor, what was the process like these days for buying a car.

 

Process For Buying A Car These Days [0:13:46]

 

Trevor: Yeah, so what I learned is it’s definitely different than last time I was looking. I looked back in 2014 when I was switching out of a car that was just costing too much to repair and then had just one car between then and now until last year. It’s interesting. I went over and looked at a Kia Telluride. I’ll just give a couple of specific examples.

 

Jon: Okay. That’s a Crossover or?

 

Trevor: That’s a full-on SUV.

 

Jon: SUV, okay.

 

Trevor: It has a third row, bucket seats in the middle, really easy to get in and out of, good like family car but four-door SUV. So, great car, really highly rated – one of the highest rated on Consumer Reports. I’m really into Consumer Reports. It’s great to read about all the detailed testing they do.

 

Jon: Does Kia still have good reviews too?

 

Trevor: Awesome car. Yeah, they have great. Really, honestly, a lot of – I’m not seeing bad warranties really anywhere in the Toyota, Hyundai, Honda range. Honestly, it’s like the American automakers that have kind of like the worst ones like I remember when I was looking at Ford five years ago – I haven’t even looked at them this time – but it was like three-year, 36,000-mile, engine drivetrain, and Hyundai is 100,000, 10-year. They’re kind of known for being one of the higher end ones. So, yeah, I mean if you’re looking for warranties like…I don’t know that American cars have like good warranties but I can tell you the other – Toyota, Hyundai, Kia – they’re all pretty good. I think Kias might be a little less but, regardless, checking out the Telluride, really highly rated objectively by that source and it was on a lot of 61,000 dollars in the MSRP, meaning, like the price it’s assigned at the factory when they make it was 51,000 so it’s currently available and it’s 10,000 more than it should be new. So, I was just chatting to the guy about it – the salesman – and I came back a week later because they wouldn’t really budge on price. They were like, “Oh, we paid 6,000 over asking from another dealership to bring it here to sell.” I’m like, “Okay, all right,” whatever. So, I come back a week later. I’m like, “Hey, you told me the car would be off the lot in a matter of days yet it’s still there. You’re willing to come down on the price,” and they’re like, “Nope,” and I was like, “No problem, not interested.” But I picked their brains a little bit more like so interesting. Obviously, this is kind of new. It’s good and bad for you because you have less volume but you have to sell these cars and then you just basically have to charge more if you want to make the same. Obviously, most of the dealerships make their money on repairs, not on selling cars, but now they could do a bit of both but it’s low volume. He said if I buy a new one and I’m willing to wait – 10 to 12 months is the lead time from willing to wait – then I just pay MSRP and I can do a refundable deposit. So, I think part of the reason that cars are kind of gone is because people have been doing that like a year ago, they would buy and they put 500 down, fully refundable, and when the car would arrive, they could just buy it and they don’t have to buy it, they’re not obligated, fully refundable, but if the market is still tight, they can buy it and just flip it. They can sell it immediately for more. There’s got to be people out there that are speculating on these cars. There’s no penalty for not taking delivery when it arrives so you’ve got a little bit of cash here and there. There’s got to be people that are probably making decent money on that. I saw there’s an article about a guy who has been doing this with Tesla. He has bought like four or five in the last year and flipped them for 7,000 a piece on average and he was doing no work other than putting a hundred dollars down and then financing a vehicle and selling it immediately and he’s making seven grand a quarter doing that, you know. That’s no work – not no work – but it’s slow work and it’s a business, you know. He’s looked at all the details. Anyway, so, there are some ways to get them for cheaper as long as you’re super patient, you don’t have an immediate need. So, if anyone’s looking at cars and they’re like, “I want to wait a year,” I mean go look at cars now, decide, put down 100, 200, 500 or whatever it is, fully refundable. For any physician and healthcare workers listening, that’s a totally reasonable amount of your paycheck. If you’re thinking about a car a year from now, you should easily have that that you can put down and then you save, you know, what is that like, about 20 percent, a little bit less on that. if you’re going from sixty grand to fifty grand, that’s an amazing return on your money. You’re making ten grand over a year essentially versus buying it.

 

Jon: Just for waiting, right.

 

Trevor: Just for waiting. It’s really interesting. You can buy used but it ends up being almost the same price as the list price if it’s a year-old, two years old. Some of them sell for more even than a new car because of immediate availability. It’s variable, depends on the brand, depends on your area, but if you go on Carvana, CarGurus – these apps – searching around for cars, you’ll see. I mean, they’re really just…you just can’t find them. They’re super hard to find. If you want a hybrid, it’s like impossible. So, that’s the gist of kind of the market if you’re looking for what everyone else is looking for, when everyone else is looking for it. That’s going to be the hard thing to find so right now that’s high gas mileage, sedans, and SUVs, so hybrids are really tough to come by.

 

Jon: Yeah. So as gas prices have gone up, have you noticed more SUVs, full-sized trucks available – that kind of thing – or not really?

 

Trevor: Totally. You can go buy whatever Toyota 4Runner you want from any Toyota dealership right now.

 

Jon: Okay.

 

Trevor: You can get any color, any version, interior, exterior, different technology packages, and trucks are still pretty popular so they’re not necessarily as easy as SUVs, I think, because there’s just such a big market for trucks but, yeah, you can find like a Toyota Tacoma in a lot of different colors without driving more than 30, 40 minutes away because their gas mileage is like 18, 22 or something like that.

 

Jon: For what?

 

Trevor: Anything in that like teen range, it seems like it’s pretty easy to find them.

 

Jon: I know the thought…there was a thought crossed my mind to sell my Suburban a few months ago but then as gas prices have gone up, that’s not so appealing anymore. What about financing? What’s the process? Financing what are options like out there? What is interest like out there?

 

Financing: What Are The Options? Interest Rate? [0:19:26]

 

Trevor: Yeah, it’s not. I thought it was going to be higher. I was kind of nervous. I thought I’d walk in, learn, find a car I liked, and then it would match sort of the housing market. I was fearing 5 or 6 percent rates. I was just thinking, I might need to buy a less car, but it’s looking like…here’s certainly the trick. The lower you can go on the amount of months you’re financing for, the lower the rate – dramatically lower. I was looking briefly at a Mercedes just mostly out of curiosity like E350 is a really nice car.

 

Jon: Okay.

 

Trevor: Everybody likes some pretty reliable for a Mercedes, you know. It’s kind of the second nicest luxury sedan below an S-class – those are like 120,000-plus S-class. These are like 70 to 80, you get a used one from the 60s. So like Mercedes in the 18, 19, 20 car years, they’ll go down at 1.99 percent and those are certified pre-owned. So you’re getting basically slightly older car, all the warranties of a new car, you know. They check the tires, they do all of the stuff, the replacement if they have to, and you get 2 percent financing. Well, that’s at 36 months. So your payments are like 1500 dollars a month. It’s like I think a student loan payment for a lot of people. So, for a rapidly depreciating asset, maybe they haven’t been depreciating much for the last year and a half but I don’t think anyone thinks that will be the case over the long term. So most people finance for that reason because they don’t want a lot of their cash flow each month to go into a rapidly depreciating asset even if you’re going to get all the way down at 2 percent. Like if I get a 3.5 or 4 percent loan on a 45,000- to 50,000-dollar car, I’ll end up paying around five to seven grand, really more like 5500 in interest over a period of 60, 70 months or so. It’s not like…I mean, it’s a chunk of interest when you think about it. That’s 10 percent more in final cost, but it’s not terrible. It’s worth it to not be paying 1500 dollars a month even if I saved three grand over the life of the payments. At least to me. You know, that’s where it gets like just a personal decision of what do you want to look like.

 

Jon: And relative to your cash flow and stuff.

 

Trevor: Yeah. I’m personally leaning towards trying to get something in like the 700-something dollar range, 4 percent interest. You know, a couple of years ago, that would have been 2 percent probably which is nice but it’s totally doable and, yeah, I’ll probably go with that. It gives me some space. You know, I could do it shorter and ratchet it up to a thousand a month and probably get down to like 3 percent or something.

 

Jon: Yeah.

 

Trevor: I’m just glad it’s not 6 percent, you know, like the housing market.

 

Jon: Is it through the dealership or is that a bank credit union?

 

Trevor: Really either. So, my experience with the dealership is that they’re like, “Hey, we can just throw this out to the local credit unions. They get the best rates for preferred lenders.” It’s the same process going through them as it is going through the bank. They kind of do it for you. I mean that’s what I found. You can kind of pick your poison. Some of them like I’m looking at other types of loans like for business ventures and you don’t want to do a bunch of hard pulls on your credit when you’re applying for other things at the same time unless you’ve got great credit. Maybe, it’s okay, but it’s ideal not to.

 

Jon: Which you pulled off, you’re awesome.

 

Trevor: Yeah, so I’m not doing a shotgun approach. I talked to one lender that was like, “Oh, send it up to 72 loan companies and get quotes from all of them.” You know, they say it’s a soft pull, but I’ve had soft pulls that are actually hard pulls before and so I never really believed anybody. Tell me if you’ve had different experience but I have had people said it enough times where I’ve ended up with a hard pull that affects my credit. I’m just like, “I don’t’ need 72 quotes, you know. I need one that I’m okay with.” Sure, it’s great to shop it around and check and maybe get a quarter percent and a half a percent. But in 50,000 dollars at half a percent, yeah, you’re going to save a little, maybe like 5.

 

Jon: Especially on 4 percent. Yeah, if it’s 4 percent, how much could this spread on the range actually be.

 

Trevor: It’s not going to be big, there’s not a big difference. How much, you know, for 500 dollars, you want to spend an extra week looking at cars, that’s a lot of your time driving to dealerships dealing with all that stuff. So just to have to remember, your time is valuable as well so I’ve gone with a simple approach on that and I was already pretty happy with those rates.

 

Jon: Okay.

 

Trevor: I think I’m pretty close to pulling the trigger on one of these and getting back to the life of driving a car with air conditioning. It sounds amazing.

 

Jon: Yeah. It’s pretty sweet.

 

Trevor: It’s going to be great and I’ve saved a ton of money over the last year driving this kind of POS but also a great gas mileage car. So if you sacrifice for a while, eventually, you know, it’s okay to let yourself go ahead and spend a little bit of money and enjoy your earnings.

 

Jon: Yup.

 

Trevor: I’ll report back and let you know if I’m actually able to do that but that’s what I’m going to try to do is actually enjoy some of my earnings.

 

Jon: Good.

 

Trevor: Hopefully, I won’t regret it. I don’t think I will but…

 

Jon: No. You got a good job. You got a good, you know. Your life is finally stable again after Jamaica.

 

Trevor: Traveling, yeah. Lots of great experiences and in one spot…yeah. Well, it wasn’t even worth having a nice car then, and now, I’ll be using it. I think I’ll drive about 20,000 miles a year or so with the new job because it’s kind of jumping around different offices so this is a good time to be doing what I’m doing. It makes a lot sense.

 

Jon: Okay. I like it. Okay, so you’ll find out you said in September-ish kind of what they’re thinking or before then on the car?

 

Trevor: For which part?

 

Jon: And the car should be in by?

 

Trevor: Oh, yes. I’m actually going to buy a used car. I’m going to buy a 2021 used car that’s pretty hard to find and if I order it new, they don’t have any lead time on it.

 

Jon: Okay.

 

Trevor: And you can’t order – the car that I want, you cannot order currently for next year even because they haven’t finalized the model design. So, I’m like, “Okay, cool. I don’t need a brand new car.” I would be happy with a 2019 or 2020. They just happened to have a 2021. It’s a very limited selection so you just kind of get what they got and I looked online; couldn’t find any online, so there you go.

 

Jon: Okay. Gosh, it must have been- I think I was doing a review with a client with a similar thing. They’re like waiting for a text from the car to tell them the car is in, they’re on its way or something like that and stuff.

 

Trevor: Yup, they ordered ahead and then they pay in full when it arrives.

 

Jon: Okay.

 

Trevor: Yeah. Typically, a pre-approval letter when you apply for a loan, you can get a pre-approval letter and you just go around and show them the piece of paper and then you’re good to go. They’ll kind of take care of the rest.

 

Jon: Like shopping for a house?

 

Trevor: Yeah, like shopping for a house. They typically only last like 60 days and you potentially have to apply for the loan twice like when you first go looking and then if they don’t have it and you order a year out, you would have to apply again before they get it in.

 

Jon: Yeah, that’s fair.

 

Trevor: Kind of a weird thing, just told me that, yeah, that can happen. It’s all new territory to be able to or to have to order that far.

 

Jon: Yup.

 

Trevor: It’s kind of interesting.

 

Jon: Okay. Well, super. Any other tips or tricks for our young docs buying a car? Anything else that you feel like, “Hey, here’s one or two things you should know or just keep in mind, they’re super important?”

 

Extra Important Tips In Buying A Car [0:26:02]

 

Trevor: Yeah, my wrap on the summary would be like use reliable objective sources to pick a reliable car.

 

Jon: Okay.

 

Trevor: So, Consumer Reports is pretty solid. Kelley Blue Book has just user reviews and people posting like, “This car sucks, I had to do this and that,” and you can see if there’s a trend of those. Like Consumer Reports is great. They do one big annual issue every year that just came out and that goes through really almost all of the cars commonly on the road in the U.S. So I used that as a final reference of, you know, even certain model years of a car even if you got a Toyota Corolla or something, incredibly reliable. There’ll typically be one kind of weak year where they were tweaking and generally the best cars are like three years after a new model year because they kind of work through some of the kinks the first year or two. You don’t often want to buy the new model. You get the newest refresh of a model year.

 

Jon: Right.

 

Trevor: You often don’t want to do the last one either from what I’ve seen because they kind of tend to tail off they’re working on the other car. So something in the middle. Toyota seems to refresh like every 8 to 10 years or so, so it gives you a wide range in the middle. I don’t think you can really go too wrong with a Toyota typical sedan if you had to choose and then Lexus is still like the most reliable car brand. That’s the luxury brand also owned by Toyota – the most reliable car company plus sort of. They’re number one and usually number two with Toyota.

 

Jon: Okay.

 

Trevor: I think that’s a very valuable thing. Depreciating asset should at least be a reliable depreciating asset.

 

Jon: Yeah, maybe, if anything, depreciates slower than some other car potentially or something, okay.

 

Trevor: Yeah, exactly.

 

Cars That Depreciate The Least Can Be Part Of Estate Planning (Long-Term Care Planning) [0:27:32]

 

Jon: Good, but it kind of reminds of another story. My dad was working with some older folks on some estate planning and part of the name of the game there is Medicaid planning or long-term care planning. They’re trying to get assets – money, investments, cash – out of consideration for Medicaid because if you have too much money, Medicaid won’t pay for your long-term care and you can’t just get rid of it because they look back five years to see what your net worth was or what you had but anyway. So he said you can put money into cars which obviously depreciate but he would like around for doing a research on cars that depreciated the least where they could kind of park money for these people and get it out of consideration, and at the time – what did they buy? It was like a BMW X5 or something like that that is holding its value the best, and so, there’s other ways that is useful but, all right. Well, I think that’s hopefully helpful on buying a car and whether you’re listening to this five years from today’s podcast or five days from it, it might be in a different car buying and selling environment but there’s some good rules of thumb for you to remember regardless and then some just little nuances about the time that we’re in this year. Are we headed towards a recession? Will these prices be dropping soon? Where is gas prices going? All these things. Perhaps while you’re listening to this episode, you already know the answers to these questions that I’m asking about the future. But either way, the financial advice that we have here is always solid and we’re always trying to prepare for whatever the future may hold, planning all contingencies and if it and when we need to. So, if you got any further questions on that, you know how to get a hold of us. Go to financialmd.com. You’ll find all the free resources there. You’ll find our financial planning app designed for residents. You’ll find the links to our YouTube, to our TikTok, our Instagram. We’re trying to get videos out at least once a week. So, TikTok, Instagram are going to be the best place to catch those videos and subscribe and follow those but you’ll see this video on YouTube and Facebook and please not only subscribe to this podcast if you haven’t yet – I’m assuming you have. I never know why they always ask at the end of each podcast I listened to – you need to subscribe to this podcast – like I’m listening to it. But what’s big is two things: Please share and please leave a review if you want this info to get out to other doctors. If you feel like it’s good, if you’ve benefited from Financial MD at all, get the word out. We’d love to hear from you. Shoot us a message. As always, Dr. Smith, thanks for joining us. Always a pleasure to hang.

 

Trevor: Yup, great talking with you, Jon. See you on weekend.

 

Jon: Yeah. We’ll see you guys next time.

 

Thanks for joining us for another Financial MD Show. Be sure to head over to financialmd.com to get more in-depth resources on financial tips for physicians and don’t forget to join the Financial MD community group on Facebook, where physicians at all stages of their career gather to share tips and get ideas on achieving true financial success. We’ll see you next time.

 

The Financial MD Show is for informational purposes only and is not an offer to invest. It is not financial, tax, or legal advice. Be sure to seek financial, legal, or tax professionals when making any financial decisions. Before investing, you should make sure that any investment strategy or investment meets your individual investment needs, goals, and objectives. Financial MD makes no claims or guarantees to individual investment performance. All investing involves the risk of loss as well as the potential for gain.

 

 

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