The Biggest Wealth Killer for Young People

Dave and Brian Orlando on why overspending on cars quietly destroys wealth—especially when you’re young.

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My biggest pet peeve. I think it’s the only thing that I rant and rave about is what a lot of people, not all, but maybe 30% of the people I deal with spend on cars relative to their incomes. So we have a lot of younger people in their twenties and thirties and forties who I would argue legitimately can beef that the cost of living is crazy and it’s making all this very difficult.

But in that group, we have a subset who, while they’re making that legitimate beef, are buying cars that don’t match their incomes at all. How do we finally get people to see this all differently?

It’s so frustrating. I saw it when I lived in California, too, in Irvine, in Orange County, everyone is driving a flashy car, and this expensive life habits of like flashiness and everything like that.

I, I think it’s like a little bit of a culture thing where it’s like, you really don’t need to be that flashy. I’m not really much of a flashy person myself.

You’re an accountant, how flashy can you be? Let’s be real.

Um, I’ve been driving my Nissan Rogue forever. Like I’ve driven it for, you know, 9 or 10 years now. And I’m going to keep driving it until it doesn’t make sense.

At some point it really won’t. It’s hard to get bought into that mentality of like, please save a little bit of your money and invest it. And just getting like these crazy car programs that are extending yourself beyond your means. It’s, it just eats that paycheck, especially in your best earning years.

You talk about compounding. It’s like the benefit of just saving a hundred bucks when you’re, you know, really young, you’re starting off your career. It’s like the benefit of just saving a hundred bucks when you’re, you know, really young, It really does add up. I mean, saving a hundred bucks a month over your entire career can, can lead to a very good situation.

You, you’ve nailed it. In some aspects, that’s the worst money to lose. You lose a few thousand when you’re older. That’s not as big a deal as losing it when you’re young because of the foregone compounding. But no, your thoughts on cars are bang on, and I just shake my head.

I think the media. Uh, part of me, the car industry has done a wonderful job of selling us the, the cars to some extent define us, and we’ve all bought into that. And I see a lot of couples now where they’re stretched financially, but they have two really nice cars. And just making one change there would free enough money to, let’s say, optimize, uh, an RRSP or a TFSA contribution.

Crazy.