Car Loans and Novated Fleeces

Now, car loans, we've all had them. They are literally the worst thing you can do for your financial future. Let me explain. The stats are if you buy a brand new car, it will lose 70% of its value in the first four years. 70% of its value in the 1st four years. Imagine investing in anything that you're guaranteed to drop 70% in four years. You'd never ever do it, let alone go into debt for it. I mean, this is crazy. Most car accidents happen on the showroom floor. The minute you turn the key, there's $5,000 just off the price there and then. So the smartest thing to do with a car is buy something that's second hand, about four years old, someone's already taken that 70% hit. Now you've also heard of car novated leases. I like to call them novated fleeces with an F. Why? Because they literally just fleece your salary, each and every pay because they bundle up this petrol, the maintenance, the tires, all this sort of fluff, which you never actually end up using that much, is all packaged and taken out of your money pre tax. They always sell on a tax deduction. Anything in your life, if you ever hear it sold on a, it's going to reduce your tax, it's going to give you a tax deduction. Alarm bell should be ringing. Never ever do anything that's promoted or advertised as a tax deduction or reducing your tax because in actual fact you're just losing money and you're getting a tax deduction because you've lost the money. So with a novated fleece, never ever take money pre tax and put it into a liability. Always take money pre tax and put it into an asset, such as your superannuation fund for example, or an investment which is going to grow. So novated fleeces simply take pre tax income, let's call it $1,000 per week in income. The Nevada fleece will take out $200 and then put that towards the car, the petrol, the maintenance and the tires. You Never really spend $200 per week, but they will take that out anyway. And at the end of the novated fleet, you're going to be left with a big nasty balloon where you're going to have to pay a lump sum to own that car outright. So the smartest thing to do with cars is a never get a loan for them. Buy the cheapest car your ego can afford to drive. That's going to be a very tough thing for a lot of people because all a car does is represent your ego. Bigger flasher, brand newer, shinier car just means that your ego needs a little bit more stroke in there. So for me, for the last six or seven years, wholly and solid, because I paid cash for it, I didn't owe any money on it.