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Dream Home vs. Dream Car

Posted by Leanna Conoscenti on Tuesday, September 12, 2023 at 4:30:18 PM By Leanna Conoscenti / September 12, 2023 Comment

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Should You Buy Your Dream Home or Dream Car? 

Check out this scenario that Gary Keller, the founder of Keller Williams, recently shared. Let's say you bought a home in 2014 for $400,000. You put 20 percent down at a 4 percent interest rate. And you own a truck that you bought in 2015. Your monthly mortgage payment is $3,194 and your truck is paid off. You decide you want a new truck so you stay in your budget home and buy your dream car. Your monthly debt with your mortgage and new car payment is now $4,804 per month. 

Or you could go with scenario number two where you decided to keep your paid off truck, and instead buy your dream home. That home you purchased for $400,000 in 2014 is now worth $800,000 so you sell it and use your full equity towards your downpayment and you buy a 1.1 million dollar house. So you drive your budget car and live in your dream home and your monthly debt is now $4,460. That's more than $300 less than if you bought the new car instead. 

For every $50,000 in car debt at today's rates, you are losing $200,000 in home purchasing power. So instead of spending your money on a car that will lose value the second you leave the lot, drive your budget car and live in your dream home. 

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