180 – Some Important Financial Advice – Microdose U

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Hello there! It’s Dr. D the “V”, Dr. David Madow. Welcome back to another episode of The David Madow Lifestyle Show. I am so glad to have you with me. Whether you’re a brand new listener or whether you’ve been listening to me from the start, I really appreciate you!

Let’s dive right into today’s show. I was about to do another topic, I have to admit. But something else just came up this morning and I’ve got to talk about this because it’s so important.

Here’s what happened. I put a Facebook post up telling people that if they are looking for a new car that they should buy a used one. And oh my god some I the answers I got! Some of them were good. But some of the answers I got were from people that have no idea – no clue – how to manage financial aspects of your life. It’s very scary. And I want to make sure that I give you some guidelines and parameters because if you’re financially responsible your life will generally fall into place. But if you’re haphazard and doing things that don’t make financial sense, your life could fall apart and it could be very very dangerous.

As I’ve told you before, the great majority of breakups of marriages are for financial reasons. If you’re not on the same page financially and if you’re not doing the right financially, you’re going to have problems. And I don’t want you to have problems.

So here’s what I did. I put a post up this morning on Facebook and I just gave some guidelines like, “if you’re looking for a new car, here’s what to do.” What I said was to only pay cash for a car. Never lease. Never finance. Only pay cash for a car. Buy a used car that you can afford. Buy a good quality used car that is just a couple of years old. But make sure it’s a car you can afford and pay cash for it. Never lease and never finance.

Here’s another great rule that you might want to write down. I didn’t make this up. This is actually Dave Ramsey’s rule. Dave Ramsey is a mentor of mine and somebody that I have been following for many many years. When I started adhering to his principles, things started changing in my life totally. Like no stress because I was doing things right. I’m doing things that I can afford. I’m doing things smart. But Dave Ramsey’s rule for buying anything with a motor is that the sum of the value of your cars (boats, planes, etc) should not be more than 50% of your take home pay.

So let’s say you make $70,000 a year as your household income or whatever that number is. Then go outside and total up the current value of all your cars. If you’re not sure what they are check online at Kelley Blue Book. Once you do that, check to make sure that the value of the cars in your driveway do not exceed 1/2 of your annual salary. So if you have a household income of $70,000, then they should not total up to be more than $35,000. If they do, you are not in alignment with where you should be. You might want to consider selling a car or downsizing to something less expensive.

A lot of times when people buy a new car and they get a loan, as soon as they drive the car off the showroom floor they owe more than it’s worth. It’s crazy. I cannot stress this enough.

And I want to share with you some of what people said on my Facebook page. They are dead wrong. But I want to share with you some of the thinking out there because it’s dangerous. Some of these people come across sounding like they really know what they’re talking about but they don’t. As my good friend Dave Ramsey says,

“Almost everybody is broke.”

Don’t listen to broke people when they are giving financial advice. Listen to smart people that have done it right. Dave Ramsey is doing better than me. He is a multi millionaire. He’s done really well for himself. He was once bankrupt because he made a lot of mistakes and now has built up quite an empire of businesses.

I will not be a Dave Ramsey nor do I need to be. But I am definitely fine and I have definitely made a lot of good financial decisions. I live way below my means and I am debt free. So when I bring money in, a lot of my money goes towards investing, retirement, and charitable giving. It feels really good to be able to do that. And you can do that at any level. You don’t have to be making six figures a year. You can be making a moderate income and still be living way below your means.

So here are some of the things I am seeing on my Facebook page. These people are espousing total misinformation and unfortunately sounding very authoritative.

One guy told me that I was dead wrong. He said that maybe my thinking was ok many years ago but times have changed. And these days it makes sense to buy a new car and possibly lease it because the warranty is going to prevent you from needing expensive repairs and you’ll also get the latest safety features.

Now, that just doesn’t make any sense because no matter what year we are in right now, there is nothing that is ever going to be better than paying cash for a car that you can afford. There is nothing that’s going to come around to Trump that. Nothing’s going to be better than that.

Unless you have a net worth of one million dollars or more, don’t buy new. My net worth is well over a million dollars and I still don’t buy new. I don’t need to buy new. Why would I? I drive around in a 2005 Volvo XC90. I love it. It just turned over to 112,000 miles and the thing still looks like it came off the showroom floor. Why would I get rid of it to spend $40,000 to $50,000 on a new car? Why would I ever do that. It drives great. I upgraded the sound system a few years back so it’s totally up to date and modern. What would I want to give this up to spend cash on a new car? That’s crazy!

For the most part people that are leasing cars cannot afford them. But they find the monthly payment to be palatable and they feel that they can afford more car. They’ll never own the car, they just lease it. So they drive more car than they can afford. It just doesn’t work mathematically. But people on Facebook are saying these crazy things about how wrong I am and how you have to buy a new up to date car. Well, my car is a 2005 and I’ve got airbags. A Volvo is a very strong safe car and I don’t feel that I need to buy a new car to be safer. Number one, I drive safely. Some of the thinking out there just does not make any sense.

Leasing is the most expensive way to drive a car. Do I need to repeat that? Don’t lease! Now, people came onto my Facebook page and told me that leasing makes sense because if you own a business you can write it off and the tax benefits outweigh the cost of the lease. That sounds good. But guess what? They’re totally wrong! Dave Ramsey has done all of the math on this and even as a multi-millionaire he has said that he would never lease a car. Even if you get a tax write off, how could it be better than paying cash for a car that you can afford?

I am not saying to pay cash for a brand new $80,000 Tesla. That’s crazy! If you’re making $40,000 a year and you’re looking for a car, then go out and find a $4,000 Honda that maybe has some mileage on it but somebody took good care of it and you drive that. There’s nothing wrong with that. That’s what I would do!

I am worried about people that need to go around and show off at stop lights and gas stations because they have these fancy cars that are bankrupting them. Take the difference of the money that would have spent buying yourself a fancy car and invest that in your retirement so later on you can live like no one else lives. Take time to save money so that you can pay for your kid’s college. Invest in that. Have the proper health care that you need. Live in a comfortable house that’s paid off. Cars are a depreciating asset. I would rather see you put money into a home. And buy the way, it’s best to pay cash for that too.

I am quoting Dave Ramsey a lot because I love the guy. The only debt that he allows is a 15-year mortgage where the monthly payment is no more than 25% of your take home pay.

You might be thinking to yourself, “I listen to your podcast Dave because I want to be healthier and stronger.” Of course I come on and say “this is the show where I help you live stronger, thinner, healthier, and happier”, and I didn’t do it today for a reason. But think about this. If you are financially independent, you will be stronger. You’ll be thinner because it’s true that people who live their lives stress free are healthier. They choose to eat better. You’ll be happier. You’ll be stronger, thinner, healthier, and happier if you are financially responsible.

I’ve got a good friend, Eric, who I think is in his early 40s. I love this guy! He messages me all the time on Facebook telling me his financial situation and let me tell you something, he is a smart young man. It’s almost like we’re twin sons of different mothers but we’re a generation apart. Everything he says to me is right. There is no question in my mind that he’s going to be a multi-millionaire. Every time he writes to me I say, “Eric you totally get it.” He’s investing and saving. He spends much less money than what he makes. He’s eating right. He’s moving his body. He could do this podcast if I ever want to give this thing up or if I ever need a substitute. The guy is really smart. He’s no smarter than you or I. He just knows this stuff. He chooses to live his life on purpose.

You know darn well that if you go into a car dealership and buy a car for $40,000 or $50,000 and decide to lease it or make payments, you know in your heart that it’s not the right thing to do. You know in your heart that you can’t afford it. But some people just do it anyway. They like the flash. They like the appearance of that. What does it matter what other people think about you?

Do people think that I am poor because I am driving around in a 12 year old car with 112,000 miles on it? Well they can think whatever they want. I don’t care. I have money that I can do whatever I want with. It’s a comfortable feeling. And I am not saying this to brag or say I am better than anybody. I am just saying this because I am comfortable with my life. It pays off and it’s never too late to do this. Whether you’re 20 years old and listening to me or whether you are 70 years old, it’s never too late to start.

I love this old expression. When is the best time to plant an oak tree? Well the best time was probably 40 years ago because you would see all this growth. But the second best time is now! If not now, when?! It’s never too late to start doing the right thing, the responsible thing. I hope you do it my friend.

I want to share one more thing with you before I leave you today. I’ve got some exciting stuff coming down the pike. I am leaving in a few days for Park City, Utah. I love the place! I haven’t skied in Park City in many years now but I am meeting my friend, Mike, out there and we are going to ski for about six days. This trip coincides with my trip to Portland, Oregon where I will be speaking the following Friday. When I travel for business, I try to my best to arrange a Hippie Road Trip or something like that. Life is not all about work, work, work. Do fun stuff!

But work is fun also! We just had a group of people in town that we had a Mastermind with a few days ago. And it was just amazing. I love helping people! I love changing lives! I love motivating! I love inspiring! If you need me for anything, you know where to get me. If you know my name, you can reach me. My preferred method of communication these days is Facebook messenger.

I am here to help you. You are not alone anymore!

I’m getting ready for my trip. Let me run! And ss you know, I promise you I will be back next week! I’m Dr. Dave and I love ya!

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