MtoM #39 - Buying a Car with Cash

This is the White Coat Investor podcast, Milestones to Millionaire. Celebrating stories of success along the journey to financial freedom. Here is your host, Dr. Jim Dali.

This is Milestones to Millionaire podcast number 39. Buying a car with cash.

At some point in our financial lives, it will be time to buy a home. A physician mortgage can be a good vehicle for a young doctor who's just out of school and has a more effective place to use their money than on a big down payment.

These loans allow doctors to secure a.

Mortgage with fewer restrictions and a lower down payment than a conventional mortgage.

But if you're further advanced in your.

Career or deeper into your journey to financial freedom, buying a home with a conventional mortgage and then later on potentially refinancing that loan to a better rate with a shorter time frame could be a great move. Wherever you are in your financial journey, make sure you use the mortgage that will be most financially beneficial for you. Hop over to our recommended tab to learn more about all of your mortgage and refinancing options@whitecoatinvestor.com mortgage. Mortgage. You can do this. And the White Coat Investor can help.

All right, we've got some interesting stuff today. We have a new milestone that in the previous 38 episodes, we have never had on this podcast. And I'm really looking forward to getting into it today and talking about this particular milestone. I've told you many times that whatever your milestone is, we'll celebrate it with you and use it to inspire others to reach the same milestone. And today you're gonna see that I wasn't kidding. We're gonna take a somewhat unique milestone and use it to inspire you to do the same. Let's get our guest, Ricky on here. All right, Ricky, welcome to the Milestones podcast.

Thank you. It's good to be here.

What do you do for a living?

I'm a general dentist.

General dentist. And how far are you out of training?

Three years.

Okay. And how did school go for you? How'd you pay for that?

Oh, man, I paid for that with blood, sweat, and tears. And federal loans.

And a lot of federal loans.

Plenty of federal loans. I got a little bit of money that I borrowed from my parents, and they were gracious enough to give me good terms on that loan. A few scholarships along the way, but mostly loans.

What do you think your net worth was when you came out of school?

It was negative 165,000.

Okay. And you have recently accomplished something that many people don't accomplish their entire life. You bought a car with cash. Tell us about that.

I did. I mean, in all honesty, I've been considering applying to this podcast for a little while. In the past year, we've hit some of those early financial milestones back to broke six figure net worth. But about a month ago, I was briefly tempted to buy a brand new hybrid minivan. We have two small cars and baby number three is on the way in October. And I liked the smell and the feel of that brand new car. But I was driving home from the test drive, and I kid you not, I popped on your latest podcast at the time, which was all about cars, and it was, you know, don't buy a car you can't afford. And what. What does it mean to be able to afford a car? So when I got home, I went back to our written financial plan. I overcame that temptation, and in the next week or two, I went out and paid cash for a used minivan. It felt so good to hand over that cashier's check and drive away. It felt really good to know that my kids would be driving something really nice that we paid for and bought with cash, and that we could do all that without taking away from our written plan to pay debt and save for retirement.

Awesome.

And so at that moment, I knew driving home, Dr. Dali would be proud, and I figured, let's apply.

I am proud of you. So tell me about this. I mean, there's used and then there's used, right? Is this used or used? How old is this car?

You know, it's not that old. It's a 2017. It had about 20,000 miles on it, but I drove about three hours to find it, fighting against all the other dads trying to get a car right now along the way.

So it's newer than everything in my garage, including my boat. That's what you're telling me?

I guess so.

So it's not. It's used used, you know, So I mean, 20,000 miles is a pretty nice car, right? I mean, there's no scratches on this thing. There's nothing ground into the carpet.

Right.

I mean, this is a nice looking car. Right?

Nicest car I've ever driven.

So what does this car look like? I mean, does this. Is this all banged up or is it all dirty inside or does this look like a brand new car?

You know, it's a nice car. We're proud to own it, and it's got a few, you know, scratches. It doesn't smell like a brand new car, but we own it with cash, so that feels good.

Awesome. And now we bought a few Cars in that range of mileage in the past, I think we bought two that were about 20,000 miles and another one that was about 40,000 miles. And actually the one we bought with 40,000 miles on it was just coming off lease. I bought it in 2009. It was a 2005 Sequoia that I am still driving today. So it has lasted a long time. But I remember that was. You know, there's a few moments in life where you feel rich and walking in and buying that thing and paying cash for it, you know, when the previously most expensive car I'd ever driven was 7 or 8,000, this was probably 19. And that was a really good deal actually on it because it was the middle of the recession. That felt pretty good. I felt rich. Did you feel rich being able to write a check like that?

I felt rich. It was probably the most amount of money I've ever held in my hands. Even though it was a check, it just felt good to drive out of there and know that it was mine and know that my financial situation was no different that morning than it was then, that all my goals were still within reach and that I had. I had saved up and bought something that I could afford.

So let's talk about some of the other milestones you've hit recently. You recently got back to broke. How did that feel when you became back to broke, when you became broke again?

Oh, it felt so good, honestly. It just kind of happened without me realizing it. We'd just been socking away money at investment accounts and student loans. And then it was around last Christmas, I think, when I just started adding up the calculator and realized, hey, honey, we're broke. And that. That was fun. We went out to dinner.

Now, you. Good for you for celebrating that we missed a few milestones that we should have celebrated better. But you went pretty quickly from there to having your first 100,000 in net worth, as I understand it. How long did it take you to make that first hundred thousand? The hardest hundred thousand, I might add.

So I just checked this morning, and our net worth as of today is right around 200,000. So in the last year, we benefited pretty tremendously from some of the housing market. So we bought a small home a couple years ago when we moved here, which has appreciated pretty substantially over the last year. But that, combined with a pretty high savings rate, has enabled us to benefit pretty well.

Awesome. How much money are you guys putting toward debt and savings and investments? What percentage of your income, you think?

So my income has ranged from about $210,000 in my first year out of dental school as an associate to. At the beginning of 2020, we bought a practice. And this year our W2 is trending towards around 340 as a practice owner. So from that we live off of about $85,000 a year, just steadily. And then whatever, we offer a tithe to our church and then whatever beyond that that the tax man leaves us, we. We put either towards debt or retirement.

That's got to be about 50% anyway.

Yeah, it's a pretty good number. We don't necessarily think about the percentage as much as I try to keep it simple for my wife and I, so that's easy to keep track of. So we just say we're going to live off of $85,000. It's a little bit higher than a, you know, quote unquote resident salary. But for our family, it's. It's enough to feel very comfortable and even a little bit wealthy. So we just say this is what we make and we take out our, you know, fixed expenses and then whatever's left over is for us to live off of and enjoy. And we don't try to get too wrapped up in what comes in beyond that. We just put it away before we can be tempted to spend it.

Awesome. Well, you guys have got some great financial habits. They're starting to pay dividends already. You're buying cars with cash. You're already back to broke just a few years out of school. You own a practice now. You've got a six figure net worth that's growing rapidly. In just a few months, this year has gone up substantially and you're on the pathway to success. It's fun to see somebody in the middle of that pathway before they get there sometimes, but. But it's pretty obvious, I think, to me and to all the listeners that you're obviously going to get there in just a few more years. And so I suspect we'll have you back on here in just a few more years when you become a millionaire.

I hope so. I don't want to let you down.

All right, well, congratulations to you and thank you for sharing your story.

Awesome. Have a good one.

All right. Our audio quality on that one was a little less than ideal. I'm hoping our sound guy can work his magic with it and you still get a pretty good episode out of it. But I really wanted to share that one because it definitely demonstrates that for a few years most of us are just in the thick of it. Right. It feels like we're in a big hole. We're paying off student loans. We're trying to put something into retirement accounts. We're trying to buy a practice and a house and maybe pay off some credit card debt from school. A family needs another car, right? We got young kids. It's hard. It's hard.

In the beginning, you have way more.

Uses for cash than you have cash. And they're good uses for cash, right? Later in the journey, you can be like, well, I guess I'll invest this in taxable. I got nothing else to do with it. But at that point, you've got loans to pay off, stuff to buy that you need, down payments to save up, emergency funds that need to be boosted, you know, retirement accounts to max out debt to pay off. You got all this stuff to do. And I think it's really important that we highlight some of these. No, we should call them lower level milestones, but these things like getting back to broke, getting a net worth of $100,000, paying cash for a car, right? Lots of us have never paid cash for a car in our life. And that's a big deal to walk into a dealership and go, I'll just take it. How's that? I don't want to talk to the financing guy. And. And that is a significant milestone. So congratulations to them. And if you would like to get your milestone on this podcast, you can apply@whitecoatinvestor.com Milestone.

At some point in our financial lives, it will be time to buy a home. A physician mortgage can be a good vehicle for a young doctor who's just out of school and has a more effective place to use their money than on a big down payment.

These loans allow doctors to secure a.

Mortgage with fewer restrictions and a lower down payment than a conventional mortgage.

But if you're further advanced in your.

Career or deeper into your journey to financial freedom, buying a home with a conventional mortgage and then later on potentially refinancing that loan to a better rate with a shorter timeframe could be a great move. Wherever you are in your financial journey, make sure you use the mortgage that will be most financially beneficial for you. Hop over to our recommended tab to learn more about all of your mortgage and refinancing options@whitecoatinvestor.com mortgage. You can do this, and the white coat investor can help.

Keep your head up, shoulders back. You've got this.

We can help.

We'll see you next time on the Milestones to Millionaire podcast.

My dad, your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.