Ep. 34 | One Car Loan Can Wreck Your 30s

Think taking out a car loan in your 20s is no big deal? Think again.

In this episode, Tré breaks down the long-term consequences of everyday debt decisions using real-life modelling to show how a single $40,000 car loan can quietly derail your financial trajectory for decades. It isn’t only about interest—it's about financial stress, lost time, and missed opportunities.

If you’ve ever said, “I had no choice,” this one’s for you.

What you’ll learn:

• How a single debt decision at 25 changes your life at 45
• Why debt isn’t just about cost, it’s about long-term stress
• What “financial flexibility” actually looks like
• The hidden opportunity cost of car loans
• Why delayed gratification is a wealth-building superpower

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Transcript

Tre 0:00

Hello, and welcome to the Plain English Finance Podcast, the podcast dedicated to helping you make smart financial decisions. I'm your host, Tre Bynoe, certified financial planner and chartered investment manager. I'm a financial planner, TCU Wealth Management, and Aviso Wealth. For more details, or to send in your questions, check out the show notes at trebynoe.ca/podcast, and if you want to learn more about me, start with episodes one and two. So. We are now on the 34th episode. Oh, okay. So do you know what this episode was about? Do you remember?

Sierra 0:30

I can't remember. It's been a while again. And we're surviving on a very rough night previous. Does that make sense? Last night we didn't sleep basically because of the little one. Yeah.

Tre 0:44

Uh, so this one's on debt.

Sierra 0:46

Oh, right.

Tre 0:46

So what we're gonna do is we're actually gonna split this episode into two parts. The first part is going to be on why it's important.

Sierra 0:55

Why debt is important?

Tre 0:56

Yeah, the impact that it has, getting out of debt, avoiding debt, the impact that it has on somebody's financial trajectory on their life, and how seemingly small decisions can make a large impact, not only to financial goals, but really security and safety. So we'll talk about that.

Sierra 1:16

Okay.

Tre 1:16

And then the next part two of the episode well not episode, next episode, but part two of this

Sierra 1:23

series

Tre 1:23

topic is, gonna be on how to get out of debt efficiently.

Sierra 1:29

Okay.

Tre 1:29

And that's where we'll talk about the, the snowball.

Sierra 1:31

Oh, the methods,

Tre 1:32

yeah, exactly.

Sierra 1:33

The avalanche.

Tre 1:34

Yeah. So we'll go, we'll break some of that down. Okay. So first off, I spent some time this morning, you know, enjoying myself with my financial planning modeling software, as you do.

Sierra 1:48

I was wondering, it's Sunday, by the way. You woke up early.

Tre 1:53

You know what I, I really wanna do, um, anyway, and I modeled two examples and I picked on cars because cars are probably the biggest. A lot of people will say things like there's no way to get ahead, or it doesn't matter. Like It's stacked against you. There's nothing, no, nothing, I have no control. It's just life happening to me. And that's the reason I'm in debt is because I, there's nothing else I could have done. And me being me... a terrible excuse. There is always things... decisions that you make that make something more likely.

Sierra 2:31

Yeah.

Tre 2:32

Okay. So yeah, I will, where should I, this is, so what I'm showing Seese is a, is an Excel document. I basically exported some of the data from it. And this data is somebody that's 25 years old. One individual decided to buy a$40,000 vehicle

Sierra 2:52

Mm-hmm.

Tre 2:52

At 25 with debt. Right.

Sierra 2:56

Yeah.

Tre 2:56

And the other individual decided to buy a beater car. And then the argument is always,"oh, but then you have to spend more money on extras."

Sierra 3:05

Repairs and stuff.

Tre 3:06

Repairs. So I added that to this. And so for the next five years, this individual has to spend, a thousand dollars extra. So$5,000 on vehicle repairs over that time.

Sierra 3:17

Yeah.

Tre 3:18

But because. Repairs. In my experience, I don't like it to be anecdotal, but you pick a good used car.

Sierra 3:27

Like something that's not, it's not gonna cost you a ton for parts or those kinds of things.

Tre 3:31

Yeah. And you learn to do some of the work yourself and et cetera. It doesn't really matter. That's what I, that's what I modeled. So

Sierra 3:36

Yeah.

Tre 3:37

Person at 25 years old, one buys a 40,000 car on credit, other person buys a beater car and learns to repair it and et cetera. Costs them a little bit more over the next, until they're 31 years old. Okay. Okay. At 31 years old, both individuals buy$40,000 vehicles again, and they do that every eight years for the rest of their life.

Sierra 3:59

Okay.

Tre 4:00

Okay. So basically the,

Sierra 4:02

Where did you get eight years from?

Tre 4:04

Why I just threw that out there.

Sierra 4:06

It's, well, just because my car lasted eight years.

Tre 4:09

Oh, really? Okay. Originally, the reason I picked eight years was'cause a lot of car loans are seven.

Sierra 4:15

Oh.

Tre 4:15

And what people will do, is they'll say, okay, well when I've finished paying off my loan, I'll keep putting that money aside for the next car. Right.

Sierra 4:25

Right. So if they pay, sorry, say that again.

Tre 4:28

So they have a car loan. They'll buy a car. Mm-hmm. And then they will pay off the car loan.

Sierra 4:31

Mm-hmm.

Tre 4:32

And then if they're good, like they're trying to be good with money, they'll keep putting that payment aside for the next vehicle.

Sierra 4:38

Okay. So that they'll have a savings.

Tre 4:40

So they have a savings for that vehicle. Right.

Sierra 4:42

Okay.

Tre 4:42

Um, something else, to notice about this, these two people, that is the only difference in decision making that this person did. Okay. Both people spent exactly the same amount of money.

Sierra 4:53

Same income.

Tre 4:53

They earned the exact, everything was identical. The only difference, and I put here again, that these people made perfect decision making, so they picked everything I teach. They picked their expenses.

Sierra 5:05

Wow.

Tre 5:05

Didn't go over it. They saved everything else in addition to that.

Sierra 5:10

Yeah.

Tre 5:10

Which meant that their payment for their vehicle came from money that would've otherwise be saved.

Sierra 5:15

Right.

Tre 5:16

Okay. So both lived exactly the same lifestyle aside from these five years.

Sierra 5:21

So, at 25, one decided to put 40 K on credit and one decided at 25 to buy a$10,000 car.

Tre 5:31

Yeah. And then had to put an extra

Sierra 5:33

1000. So 15 every single, yeah. 15,000 total money. Okay.

Tre 5:37

Okay.

Sierra 5:38

Yep. Got it.

Tre 5:39

So. And I, I thought of a few things in here. So they're both earning about$75,000. They both have a mortgage, it's the same person, that's the only difference. As soon as they were done paying off their house, they started going on more luxurious holidays.

Sierra 5:53

Hmm.

Tre 5:53

They both spent money. A lot of people will think when I'm saying, you should avoid debt, save, et cetera. They think it means not

Sierra 6:01

It's like, reuse your floss. No, that's crazy.

Tre 6:03

Yeah, no, It's Like not enjoying life? No. Both people did that, but the position they were able to do that from is very different. Yeah. So the first rows here, are available assets to invest. Uh, it's like draw from. Okay, so first off. These people are broke during their twenties

Sierra 6:22

their twenties as you are, as everyone is.

Tre 6:24

Yeah, absolutely. So you'll notice that, so the person with a$40,000 car throughout their twenties until they're 30 ish, pretty much they have under$10,000 of savings.

Sierra 6:35

Right.

Tre 6:36

Okay. Person B that bought the other vehicle. You notice they slowly gather savings. So their savings drops there because they have to buy the vehicle.

Sierra 6:45

Yeah.

Tre 6:45

Right. And then they slowly start to build. Right. And that meant that by the age of 31, when they both now start buying new$40,000 vehicles, they can now afford to pay for it with cash.

Sierra 6:58

Mm-hmm.

Tre 6:59

Okay. So the person that bought the 10,000 vehicle, their savings drops. From about$40,000. By the end of the year, it was, they'd just managed to claw it back up to$8,000. So they have$8,000 in savings after buying their$40,000 vehicle.

Sierra 7:17

Right?

Tre 7:18

Person A didn't manage to save much at all for the car, and therefore, by the end of that year, they needed to take out another loan.

Sierra 7:27

Mm-hmm.

Tre 7:27

To afford this$40,000 vehicle. They put money down as a downpayment, so their cash also drops.

Sierra 7:33

So they took out another loan. So it's not identical.

Tre 7:36

They had to. No, but they couldn't not.

Sierra 7:38

Right.

Tre 7:38

So because of the first decision they made, they didn't have the savings.

Sierra 7:42

Right. Sorry, I was just Yeah, that makes more sense. I was thinking how, because you said they did the exact same things. I was thinking, oh, they didn't take another loan, but they had to take another loan because they didn't have money. Yeah, they, they didn't have

Tre 7:52

the money, right. Yeah. So the, the, this only decision they made different was that original one. But the fact is they couldn't not.

Sierra 8:00

Because they don't have money.'cause they don't

Tre 8:01

have the money. They don't have the money. You don't have the money.

Sierra 8:03

Yeah.

Tre 8:03

But same thing they're still very disciplined, right? So it means that by the time that they, the next vehicle purchase comes around. You'll see that one here. So. There's now in savings, the person that bought the$40,000 vehicle can now afford to pay it with it. With cash.

Sierra 8:19

Yeah.

Tre 8:19

Right. So that by the end of the year that they turned 38, they have six$70,000 in cash. Um, and the person that bought the$10,000 vehicle has 110.

Sierra 8:28

So, let's repeat those numbers. So person one.

Tre 8:33

Who's

Sierra 8:33

38 has 68,000.

Tre 8:36

The one that bought the$40,000 vehicle at 25.

Sierra 8:39

And they went into debt twice now. And the other guy who bought the used vehicle to start is now at 110. In their like savings?

Tre 8:48

Yeah. In their available cash to them. Yeah.

Sierra 8:51

So that's 40, is it 40 grand? More ish? Yeah.

Tre 8:55

About that.

Sierra 8:56

So a whole vehicle.

Tre 8:58

Yeah, pretty much. But the, issue continues. So then, uh, when they're 39, finally they start to, they're on a good track now. Now they're, they're buying the vehicles. The person that originally bought the$40,000 vehicle can now afford to pay for the rest of the vehicles in cash.

Sierra 9:14

Mm-hmm.

Tre 9:15

Same as the person with the beater car. I want to highlight what the early years look like for available cash. Okay. Yeah. So because this is the reality of somebody that is perfect at absolutely everything else. Nothing else bad happens during any other time period, like nothing happened and they, both, these, both of these people managed to retire on time and et cetera. Look at 25 to 35. Okay, so this person has a house, and these are the age range that you'd be starting a family.

Sierra 9:51

Mm-hmm.

Tre 9:51

And this is the age range that your furnace might break.

Sierra 9:54

Mm-hmm.

Tre 9:55

And other expenses come up.

Sierra 9:58

Yeah.

Tre 9:58

So a person that decided to put themselves into debt instead of prioritizing building a buffer, building some cash. Imagine what happens when his furnace breaks and he has$3,000 to his name.

Sierra 10:10

Yeah.

Tre 10:11

To this person's name.

Sierra 10:12

You gotta go into debt again.

Tre 10:12

You have to go into more debt. Right? And that's not modeled here at all. Like this is purely nothing else.

Sierra 10:16

Like, nothing bad happened.

Tre 10:17

Nothing bad happened here.

Sierra 10:18

Which is not real.

Tre 10:20

Yeah. It's not real life. Uh, your your friend is going on doing a destination wedding and you want to go, guess what happens? Somebody will pick debt for it. So basically at the end of the day, you know, on retirement age, the difference is only a hundred thousand dollars. I say only a hundred thousand dollars. It's a hundred thousand dollars difference.

Sierra 10:40

Yeah.

Tre 10:40

That's a hundred thousand dollars more that a person can spend. That's a hundred thousand dollars more of buffer. But that aside,'cause most people know that, if you go into debt, you end up having less money long run. But I just want to focus on the life that you led throughout your life. Like the,

Sierra 10:59

Sorry, reiterate that?

Tre 11:00

I want to focus on the financial stress you would've been under.

Sierra 11:06

Yes.

Tre 11:06

Through the earlier years in your life.

Sierra 11:08

Yep.

Tre 11:09

Once you get to the point where they both have a hundred, over a hundred thousand dollars sitting there

Sierra 11:13

You feel like you can kind of take a breath,

Tre 11:15

take a breath,

Sierra 11:15

accept, accept, because the other person, again, in this scenario, you've said they've done everything else perfectly, but that's not real life. And people who actually take out loans for cars and things like that, they're probably in more debt. Yeah. So you have that a hundred thousand dollars at the same time, but do you also have a bunch of debt that you now have to use that towards?

Tre 11:40

Well, realistically, you wouldn't have got to a hundred thousand. So the person that, with a$40,000 vehicle, he, they get to a hundred thousand dollars at 44 years old. Mm-hmm. 40. Yeah. 40, 43 years old. They get to finally get to a hundred thousand dollars. The person that. Didn't buy the vehicle gets to a hundred thousand dollars at 38 years old. That's a big difference of time. And as we know, time in the markets and investing makes a big deal mm-hmm. That you have to work with. So there's the obvious side of it, that's the wealth creation side.

Sierra 12:12

Mm-hmm. And a lot of people when it comes to vehicles, they compare the cost of the vehicle if I paid cash versus with all the interest and things like that. And I, while that's a valid way to think about it, I don't think it's the best way. I think it's better to think about it as what did it cost me personally, my time, to purchase said vehicle. Hmm.

Tre 12:33

Because if I only have to put in, it's a$40,000 vehicle, but I only had to contribute 20,000,$30,000 to that vehicle, and the other individual that had to take debt has to pay$50,000 for that vehicle. That's not a$10,000 of interest difference. Yeah, that's a much bigger difference. That's a, you're now looking at a 20, 25,$30,000 difference between the individual that invested and saved ahead of time for that purchase versus the individual that not only didn't do that, then had to pay interest in addition. Does that make sense?

Sierra 13:09

Yeah, yeah. And it comes back to, I, sorry, I, I am listening. I'm just also thinking of, of how you started this where you said you can make decisions on things. And I'm just, I'm hearing a conversation in my head of people saying, well, I needed a car. I need a good, reliable car because of winter, and I needed to buy this car. And I was 25, so I didn't have 40 K in cash. So I had to do that. And. It's like you always have other options. You do? Yeah.

Tre 13:41

Yeah. Absolutely.

Sierra 13:42

You may not want those other options or they may not. Yeah. You

Tre 13:46

Nice beater car.

Sierra 13:47

I remember I had, when I was working downtown, I really did not want to take the bus at seven in the morning to get to work on time because it, it's not that far, but because the bus route takes so long and we don't have good public transit here. I had, well, I didn't have to do it, but I made the decision to do it because I didn't wanna pay for daily parking downtown. I didn't wanna have to take my car and it was less convenient. And yeah, I'm just using that example. Maybe it wasn't groundbreaking, you know, but it is those decisions.'cause other people would drive to work and then they would complain about, oh, parking's so expensive. Or they didn't have money for going out for lunch or whatever. You don't have that cash because you're, you're choosing, I guess.

Tre 14:34

Mm-hmm. Everything's a choice. There's lots of choices that people make. Yeah,

Sierra 14:37

yeah. Yeah. One thing or another, so, or they would just put it on credit, who knows? But, that's what, I'm sorry, that's what I'm saying is for that person, that choice, people could argue, oh, well maybe that 25-year-old needed that. No one needs a$40,000 dollars vehicle. That is a luxury. Let's be real.

Tre 14:58

Yeah, yeah, yeah. I would agree.

Sierra 15:00

You need transportation. Some people only have their legs, they walk places and, you know what I mean? I'm not trying to get into semantics, but. Yeah, I don't know. Anyways, sorry. A little sidetracked. That was probably really poorly said too. I can hear myself. I'm like, I don't know if this is coming out right, but

Tre 15:21

I'm sure your point got across.

Sierra 15:23

I hope so.

Tre 15:24

All I'm saying is that the journey that the individual that avoided the initial debt had through life was significantly easier than the other person.

Sierra 15:34

Yeah,

Tre 15:34

The other person, that one choice, put them in situations where stuff that happens that you can expect to happen is a big deal.

Sierra 15:46

It's stress. They're choosing stress almost. Yeah.

Tre 15:49

Yeah. Especially because this individual had a house and like various things. It's just there was no

Sierra 15:55

Yeah.

Tre 15:55

There was no flexibility. Again, they're doing everything else perfectly and this is where this ended up. What you often see when I was working with these type of people is that they lack delayed gratification.

Sierra 16:10

Mm-hmm.

Tre 16:11

And that bleeds into other areas, so this person just lacked it once.

Sierra 16:15

Yeah.

Tre 16:16

Imagine lacking that every year.

Sierra 16:18

Yeah.

Tre 16:19

Imagine lacking that every week or every month.

Sierra 16:22

Every decision

Tre 16:22

Every decision you make, it, does have an impact.

Sierra 16:27

Yeah.

Tre 16:27

And unfortunately, delayed gratification is, a skill that a lot of people don't develop. Which is why I try to teach contentment when it comes to finances. Because the individual earning$80,000, who is content will feel significantly better off than the person earning 150 that is always wanting more and trying to, and is always on the, the treadmill.

Sierra 16:54

Yeah.

Tre 16:55

And spends everything that comes in.

Sierra 16:57

Yeah. Because, then those things are gonna cause you more stress and also you're never content with what you have.

Tre 17:01

Mm-hmm.

Sierra 17:02

You always want more, more and more, more.

Tre 17:04

And this person was perfect when it came to contentment. As in they, expenses were capped. They did everything right. Absolutely everything right. But still, just that one decision made such a big difference.

Sierra 17:15

Yeah.

Tre 17:15

And this is why people think of decisions when it comes to debt and it comes to this type of stuff as this singular event.

Sierra 17:24

Mm-hmm.

Tre 17:24

It is not a singular event. It is a decision that you make that will put you on trajectories for life.

Sierra 17:31

Yeah.

Tre 17:31

And it's a really important thing to understand how these might seem small but they have a huge, huge impact.

Sierra 17:41

Yeah. And I think we've talked about this before, that you can't live a parallel life.

Tre 17:46

Mm-hmm.

Sierra 17:46

So

Tre 17:47

unless you have financial planning software.

Sierra 17:48

Well, that's what I was gonna say

Tre 17:49

Then, yeah.

Sierra 17:50

It, it's almost a, is it a curse or blessing? I don't know. But it, you're able to see the actual numbers. No one would actually go through and be like, oh, I wonder what I mean, I guess you did. This morning. But nobody would do that. But you don't with their own situation. No.

Tre 18:07

And not do I, not with my own situation. And it just gives you a ballpark, right? Like who knows what can happen, but the, you can get an idea and you can seek very clearly this decision puts me on this type of path.

Sierra 18:20

Yeah.

Tre 18:21

And that's, and how you finance your cars, especially in your early years is one of them.

Sierra 18:26

Hmm.

Tre 18:27

It makes a huge, huge impact.

Sierra 18:29

Yeah.

Tre 18:29

So, I was talking to somebody the other day and they said something that it just, I feel sorry for a lot of people where they don't get perspective properly. And I wish people spoke about money with their friends and family a lot more.

Sierra 18:40

Yeah.

Tre 18:40

Because I think perspective is really, really important.

Sierra 18:44

Yeah.

Tre 18:44

But they said to me, they're in retirement, they said to me,'cause I was saying that I was concerned about the available money that they had to them. Because they were retired and they didn't have money there for a vehicle. Mm. And they said. There's no way that people just have$50,000 there to withdraw for a vehicle. And I said, yes, a lot do. There's a lot that don't, but there is a lot that do. I did say I am the wrong person to ask that question too, because the demographic that I work with, it's skewed.

Sierra 19:14

Skewed, yeah.

Tre 19:15

Right. Like I work with people that tend to be good savers and so it's skewed. So I'm thinking to myself. I actually can't think of anybody in your situation that doesn't have that, which is also not true. Right. There's plenty that don't, but it's just people like to compare themselves without all the information. And I think there's a lot of people out there that would learn a lot from others that do make those decisions.

Sierra 19:42

Mm-hmm.

Tre 19:43

Because you see all the flashiness and social media just pushes a lifestyle to live, but you don't see what that's like behind the scenes. Like this individual, we're comparing two people here. If this individual, the person that bought the beater vehicle, decided throughout their forties and their fifties to go spend$20,000 a year on vacations, on a boujie vacation for them and their family. They could afford to do so.

Sierra 20:10

Yeah.

Tre 20:10

And it would be coming out of their surplus. It wouldn't be putting them more and more into debt.

Sierra 20:14

Yeah.

Tre 20:15

But the same person in the same part of their life could go do it, and it could be putting them further and further in the hole.

Sierra 20:20

Yeah.

Tre 20:21

It could be racking up credit cards to live this luxury lifestyle. For one person, it's absolutely fine. But the person going to a credit card to be able to do this? Guaranteed, they're the type of person that says, well, they can do it, so

Sierra 20:33

Yeah.

Tre 20:33

You know, everybody must be just putting it on credit cards.

Sierra 20:36

Yeah.

Tre 20:36

No,

Sierra 20:37

Stop looking at other people and what they're doing.

Tre 20:39

Yeah.

Sierra 20:39

Because we don't have our net worth above our heads.

Tre 20:41

No.

Sierra 20:42

Walking around with numbers here, you have no idea what situation

Tre 20:45

you have no idea what situation

Sierra 20:45

somebody else has.

Tre 20:46

Exactly. So just do what is the right thing long term and don't make these decisions emotionally.

Sierra 20:53

Mm-hmm.

Tre 20:54

But this is one small thing about debt. Right. And this is like an isolated event that somebody does in their 20 as their 25.

Sierra 21:02

And it's common.

Tre 21:03

It's super common.

Sierra 21:04

This is super common. Yeah.

Tre 21:05

The impact of doing this over and over and over again when it comes to every decision that you make is, I cannot stress it enough. There are people out there that they, and it's always an excuse, but they want to do a renovation on their home. Mm-hmm. It goes onto a line of credit and then they spend the next three years paying off that line of credit. They need to do anything... Well, we took that line of credit for vacation." It's like there is always an excuse not to build accessible assets. And I, I can always tell. When it comes to reviewing somebody I can tell very quickly how good somebody is with their finances by their net worth statement. I've said this earlier episode is why a net worth statement is so important for you as an individual, as a kind of scorecard. But also for me, looking at it, I can tell a ton about the individual. So prime example, three people. They can each have a net worth of half a million dollars, let's say, if that half a million dollars is in pension funds.

Sierra 22:01

And that's it.

Tre 22:02

I know that person is bad with money.

Sierra 22:04

Yeah.

Tre 22:04

If that money is split between like pension funds and RSPs, I know that person is not great with money

Sierra 22:11

Or maybe they don't have an as broad financial literacy, would you say if it was just one? Maybe they're like, I'm going all in on RSPs'cause that's what I'm told to do.

Tre 22:21

No, I would say, I would say in my experience, that's not the case.

Sierra 22:25

Okay.

Tre 22:25

I would say the people that are in that situation. Only put the money in the RSPs for the tax break and then they'll go spend the tax break.

Sierra 22:34

Ah, right. Okay. We've talked about that too. Yeah.

Tre 22:36

So. Sorry. I respectfully decline.

Sierra 22:40

No, that's fair. You are, I'm just, I'm just asking a question.

Tre 22:43

Trying to soften it, but yeah, no, I

Sierra 22:45

You know, I always gotta, I'm like, don't be mean.

Tre 22:47

No, it's, yeah, 100%.

Sierra 22:49

I'm just kidding.

Tre 22:49

And then the same person with the$500,000, part of it's in a TFSA, part of it's in a RSP is part of, it's in pension. I can tell that that person makes decisions. And is intentional, probably pretty good with managing money. They might not have full financial literacy. That's completely different. Mm-hmm. But it means that they can manage accessible cash. Because what happens, the reason why the difference is, is because RSPs are in a lot of Canadians, brains are seen as not accessible. Like you can't really

Sierra 23:21

RSPs

Tre 23:22

RSPs. Yeah. You can't access them. Pensions, you can't access them at all.

Sierra 23:26

Yeah.

Tre 23:26

So it's not even in your hands. You, you went to work, you just got not even lucky with the whatever you, you got the pension plan you got, and this is the result of that pension plan. You didn't make it, there was no restraint required. Yeah. Really, in order for you to build a pension plan.

Sierra 23:43

Because they put the handcuffs on you.

Tre 23:44

Because yeah. Right. There's a reason, there's a limit.

Sierra 23:46

You're like, I'm good not moving my arms. It's like, well,

Tre 23:49

You can't, because you, yeah, you, it's illegal so you don't. RSPs, it's slightly less restrictive now. It's like an individual just holding your hands tightly where it's like, okay, there's consequences for this. I'm told that this is a good thing to do, consequences for taking it out, I'm gonna get taxed a bunch... don't want that. With the TFSA or even non-registered accounts, that money's accessible. That money's there sitting there. You could go spend it whenever you'd like and you are choosing not to spend it. And that's very different. Somebody choosing not to spend money versus not having the money to spend.

Sierra 24:27

Yeah. Yeah.

Tre 24:28

And that is why, that's why I can tell you can tell by looking at somebody's, somebody's net worth, where they have assets and things like that. The type of the type of. How they are with money.

Sierra 24:41

Would you say that's almost like an impulsive thing? Maybe? Like I'm thinking of somebody who it's like a, they can't control or they're not making the effort to control it. It's like an impulse thing.

Tre 24:53

Yeah. It's delayed gratification. It's not having a, an overall plan. It's not understanding your money. It, it leads to a lot of things, but all of them are,

Sierra 25:01

It's like life happening

Tre 25:02

Yeah.

Sierra 25:02

To you.

Tre 25:03

Yeah, exactly. But all of those things point towards. Not very good with money. Not very good when it comes to self-control. Not very good when it comes to delayed gratification, it's, that's what it all, all points towards because you could have the same individual with the same net worth, but have incredible control over their finances, knows what they're doing. They have a plan, they, they've made decisions that lead to good consequences. Right. And it's, yeah, you can tell. So yeah, that's why it's so important to manage debt appropriately. And a big one is the car loans stuff. Mm-hmm. There's not a financial guru type person out there that will say, Hey, go take out car loans and stuff for vehicles.

Sierra 25:51

Yeah. Or they're like, oh, it's, uh, yeah, you could buy a vehicle on a loan. It's probably okay. No one's gonna say that.

Tre 25:58

I will, there's a caveat that, the caveat there though, that I don't think it's always bad to have a car loan, right. The issue is, is that the people that are asking that question tend to be the people that are not the exception.

Sierra 26:13

Yeah.

Tre 26:14

To that rule, if that makes sense.

Sierra 26:15

They want, I feel people will ask you or be like, make me feel better about this, and Tre's the wrong person for that.

Tre 26:22

Definitely not the right person for that.

Sierra 26:23

You always tell them the honest

Tre 26:26

What you, what you need to hear, not what you want to hear. Yeah, no, because it's the people that can, so that the argument would be, basically the same as leverage. Is it better for me to use my assets to pay down a loan, I can get the loan at 2%. What it's like, yes, if you have assets there, you can, you can then make that decision. And there, there are plenty exceptions to the rule. The fact is the vast majority of people are not in that boat and the vast majority of people when you do have money just pay for the car. Mm-hmm. It's just not worth it. The extra

Sierra 26:58

brain power.

Tre 26:59

Yeah. It's just not worth it. And I would say I might be one of those people that would be, okay, maybe it is worth it for me to go do it.'cause the numbers say yes.

Sierra 27:06

Yeah.

Tre 27:07

I'm saying that's what I'm saying there, there are exceptions to the rule, but if you can't walk in and pay for that vehicle, you shouldn't be buying the vehicle. And more, more importantly, if it's a luxury vehicle and you can't walk in there and buy it once, twice, three times. You absolutely should not be paying for that vehicle. If you are, if you are rocking around in a hundred thousand dollar truck and you do not have$300,000 to your name. Insane.

Sierra 27:32

Yeah,

Tre 27:33

Insane. You are asking for problems like it is. No, you are. You're buying a depreciating asset that is just an a hundred thousand dollars truck. It depreciates 60% in the first five years or something like that. So you're just burning. 50 grand. And yes, I'm not saying, and I'm not even saying don't buy new cars. I'm not even saying like new cars are not a financially good decision, but life's not all about financially good decisions. Yeah. It's like it's though, if you're gonna make a financially poor decision, you need to be doing it from a place of financial strength. You cannot be making financially poor decisions if you are financially weak.

Sierra 28:11

Yep.

Tre 28:12

Does that sense? You need to able to afford the bad decision. We make bad decisions with finances all the time. We throw money away for. Lots of things that,

Sierra 28:21

yeah,

Tre 28:21

like even eating out or convenience, vacations, convenience. Yeah. We throw money away for lots and lots of things that we choose in a lifestyle, and I would put that in the same category as buying new vehicles where if you can afford to throw the money away, if you can afford to set fire to it outside and it not impact your life, go for it. Yeah. It's just, yeah. The people that. And I'm the people that, you know, you just just, you just gotta be stronger, financially first. Anyway, that's the point. That is the, that's the theme of this episode is just the decisions you make have impact. They matter. They have long-term conse consequences.

Sierra 29:00

And I feel like another thought maybe for this is if you feel you're in a position where you're like, I have no other choice. Maybe you should. Take. If you're saying that to yourself, maybe just pause and try to think of the other options. I'm not saying you have to choose those options, but that could be like a good exercise for somebody to expand their mind. Maybe. I don't know, like to, just because I've heard, heard. So's a really good point. Yes. I've heard so many people say, that's my only choice. That's my only option. It's like, well, that's not actually. True. There's always choices. I'm not saying the other ones are viable, like some of the... right?

Tre 29:42

And I'll just add quickly. Don't eliminate choices just because you don't like the choice.

Sierra 29:49

Yeah. Yeah.

Tre 29:50

So like for the vehicle thing, a lot of people will say, a ton of people will say, I'm just not a car person. Right? So if I buy a vehicle that might need repairs. Then what if I buy a really bad vehicle? Well, then you need to take the time to go learn how to pick a good vehicle.

Sierra 30:06

Mm-hmm.

Tre 30:06

Just that is, that's the foreign concept where it's like, well, I can't do that. Yeah. It's like, okay, but we have AI now. AI,

Sierra 30:14

Oh yeah. It helped me at ton.

Tre 30:15

What you would Yeah. AI what you'd be looking for. Right? Like, you're going out and now your, your choices are, okay, well. ChatGPT says, Toyota and Honda. I'm now looking for a Toyota and Honda under 150,000 kilometers. That will probably last me another 50, like another five years.

Sierra 30:32

Yeah.

Tre 30:32

That suddenly shrinks your pool of what you are, what you're looking for, and it's, it's not, it's just people will just, like you said, they'll like, it's just a choice that they don't like, so it's, that's not an option.

Sierra 30:44

The reason I say that is because, again, I'm into psychology. The brain loves the easiest path, the path of least resistance. So if in your brain it's already eliminated those other things, that's why I say that you have to pause and almost like think more about the situation you're in because your brain will automatically jump to the solution that you kind of already want.

Tre 31:10

Yeah.

Sierra 31:10

You know, it's like your brain is just oh, this is an easy neuro pathway. Let's just hit the end point here. Get some dopamine and move on. Yeah. No, you've gotta kind of like work, work around it. So anyways, maybe that's a little, that's not really finance related. That's.. Welcome to Sierra's podcast on.

Tre 31:33

Okay. Uh, anyway, we will, we'll cut that here because we will do another episode, um, on the actual steps to get out of debt and what you're trying to accomplish and why you're trying to accomplish it so that it kind of helps you make better decisions around it altogether.

Sierra 31:53

Oops. Sounds good.

Tre 31:55

Okay, we'll see you guys the next one.

Sierra 31:56

Bye

Tre 31:57

Bye.