- 22-year-old Daniel told "Financial Audit" host Caleb Hammer he was thinking about getting a Tesla.
- But this would be his third car loan. He already has one of his own and one for his mom.
A 22-year old said he was considering buying a Tesla when he appeared on the "Financial Audit" podcast, despite having two auto loans already, including one with nearly 25% interest.
Daniel, who lives in Lubbock, Texas, told host Caleb Hammer he already has one auto loan of his own and had taken out more debt on another for his mom.
"Out of the gate dude, how did you get yourself into so much random and not good debt by 22?" Hammer asked him. "You're too young for this in my opinion. What's going on?"
Hammer uploads two or three interviews per week on his channel where he has over 570,000 subscribers. People tune in to hear the harsh but fair budgeting advice he gives to people who usually have very little financial knowledge.
Daniel said he went to a trade school and was now a certified Volvo technician earning around $1,000 per week before taxes. He told Hammer he had $12,000 of student loans, $1,628 on credit cards, $6,982 in personal loans, and $972 of medical debt that was in collections.
Daniel said he got himself "into a predicament" by moving out and paying too much in rent.
"Last year was a year where I really struggled," he said. "And this year is a year where I'm trying to step it up."
Overall, he said he thought he was now doing "pretty well" and had started saving money each month.
But Daniel's biggest debts were two auto loans that totaled $30,638. One was a Toyota Scion iM from 2016 which his mom was driving, and he was paying back in minimum monthly payments of $384 at 13% interest.
Hammer asked him why he had to buy a $20,000 car if it was just for his mom to get to and from work, to which Daniel responded, "it was the cheapest they had on the lot."
"Go to a different lot, car guy," Hammer said.
Daniel said his mom was trying to get a house, so he wanted to help her out. Hammer pointed out the risks, such as if she dies or suddenly can't afford to pay for it anymore.
"You took on the risk," he said.
"Right now I'm not thinking of 'what ifs'," Daniel said, adding that he lives "day by day" and tries not to stress about the future.
"I don't want you to stress, but I want you to at least think about things," Hammer said. "And make a plan like an adult. We can do that without getting freaked out by it."
He added that he "loved the heart" that Daniel had in wanting to buy his mom a car, but he wanted to make sure he was financially stable too. "That's the main thing," he said.
Daniel said the car he drove himself was a 2016 Ford Focus which had a balance of $11,704.75 with $312 minimum monthly payments. The car originally cost $9,500, but had increased significantly already due to the debt having 24.39% interest.
"You win the got fucked award," Hammer said. "That's death and you didn't even know it"
When Hammer asked why he was considering getting a third auto loan, Daniel said a Tesla would "save on gas," and "it's always nice to have three cars."
"Wouldn't hurt to get another one," he said. "It's always an investment."
Hammer pointed out that cars depreciate in value the moment they are bought, so it's not an investment. But Daniel said he considered it one because if his car broke down, he would have another.
Overall, Daniel owed $53,874. Hammer said Daniel had to stop spending money on eating out and subscriptions and put the saved amount towards his debts which were adding up to over $1,072 in minimum payments every month.
Hammer worked out that Daniel's needs totaled $2,387, which was 80% of his income. To start making a dent and fixing that ratio, Hammer recommended Daniel's mom take out a car loan to pay him back and get the debt out of his name, "because your future matters," he said.
"If I'm not able to convince you that your future matters in a way where you deal with this most basic thing then there's no hope, flat out, like what's the point," Hammer said.
"There's always hope," Daniel said.