DAVE SAYS

Dear Dave,

I plan to buy another investment property with cash in the next year or two. Currently, I have $83,000 sitting in a high-yield savings account at 4% interest. My goal is to save another $50,000 to $70,000 in the upcoming months. Right now, 4% is good, but I want to make sure I’m maximizing my returns. Should I be doing something else with the money?

Brett Dear Brett,

I like the way you’re doing things. Right now, you’re simply parking the money short term for a purchase a few months down the road. If you invest it, you might make a little more, but you’re taking more risk too. If I’m you, I’m parking the cash.

Here’sthedeal:Themoney you’llhavetopurchaseanother property won’t come from a return on the investment. It’ll come from you putting money in the account. The investment isn’t the secret sauce in this scenario—you are.Ifyouinvestedthemoney and made 10% rather than 4% over two months, let’s say, that amounts to about a 3% difference. That’s nothing in your case. You’re not within a couple thousand dollars of doing a deal at the moment. Your deal is a $150,000 deal. Your return on investment isn’t going to make this happen, or keep it from happening. See what I’m saying?

Just keep doing what you’ve been doing and park the money. That’s what I’d do. People who are math nerds, like us, always look for things to fix an investment. But sometimes the thing that fixes the investment is you. You are the one doing the investing. You are the one puttingmoneyintheaccount. So, in this case, don’t try to fix it. Just pile up money and go do it.

Great question, Brett!

— Dave Dear Dave,

I’ve been struggling for about a year, ever since I made a stupid new-collegegraduate decision to finance a car. It’s a 2018 Jeep Compass, and I owe $21,000 on it. The trade-in value is about $11,000, so I really got stung on the sticker price and everything else. I also have $85,000 in student loan debt and around $7,500 on credit cards. The good news is, I make $63,000 at my job, and that should increase to $75,000 by January of next year. My girlfriend and I are renting an apartment and engaged to be married in 2025. How do I clean all this up before then?

Austin Dear Austin,

Well, the good news is, you have the rest of your life to never make this kind of mistake again. I’m really sorry you’re going through all this, son. What a horrible thing to experience right after college. So, you’re $10,000 upside down on a vehicle you owe $21,000 on, right? The truth is, you’re kind of stuck. If you’re serious about getting out of this mess and not repeating the same mistakes twice, you’re going to be workinglikeadogforthenext year or two. Right now, you need a serious side job nights and weekends—maybe two. And I’m talking bare-bones living. No vacations, and no eating out for a while. You don’t need to see the inside of a restaurant unless you’re working there. Get what I’m saying? No unnecessary spending.Period.Ontopofall this, you’ve got to start living on a strict, written monthly budget.

Now, about your fiancée. I get the desire to fix things before you get married. But marriedpeopleworktogether on this kind of stuff all the time. Believe it or not, there’s no perfect time to get married. I mean, it sounds like you two have already decided to go there and figured out neither one of you are perfect. That’s just called being human. So, there’s really no reason to wait on tying the knot at this point. And the truth is, the two of you can whip your finances into shape faster and much more efficiently working on it together— as a married couple.

Austin, I want you tear into this debt like your life depends on it. Because guess what, dude? It does!

— Dave Dear Dave,

I was recently in a car accident thattotaledmycar.My old car was paid for, and the insurancecompanyiswriting it off and giving me $15,000. I’m a physical therapist who does home care treatment, so I need a reliable car for work. I’m debt-free, and I’m in the process of finishing up my emergency fund, but I can’t seem to find a car like my old 2014 Toyota Camry with all the accessories. My rental car is paid for by insurance until the end of the month, and I’ve looked at used cars at a few dealerships, but the dealers and salespeople are telling me used cars still cost the same as new ones, and that I should just finance a brand-new car. I’m not sure what to do.

Valerie Dear Valerie,

Asking a new car dealer if you need a new car is like asking a dog if it’s hungry. The answer’s always going to be yes.

Thesmartanswer,though, is this: If you’ve got a $15,000 insurancecheckinyourhand, go buy a great, used $15,000 car. You may not be able to find the exact car you had before, right down to all the bellsandwhistles,butToyota Camrys aren’t exactly rare, either. That money will get you virtually the same car— onethatisverycomparablein equipment, reliability, miles and overall quality to the one that was totaled.

I realize this whole thing is a big inconvenience. And you’re probably feeling a little pressure to make a decision. But the line you’re getting about used cars still costing the same as new cars is a load of crap. Used cars do not cost as much as new ones anymore. That was true for about five minutes on the back end of the pandemic, when the Mississippi River ran backwards and used cars went up in value. It was an absolute miracle!

There seems to be something inthehumanbrainthat tries to tell us we have to get an upgrade if we total a car. I want you to fight that idea, because you don’t need to wreck your emergency fund over something that’s not an emergency. Go online, and look around there without thepressurethatalwaysgoes with being on a car lot.

And I’m just going to say this out loud: A $15,000 car today is a much better vehicle than anything I drove for the first 30 years of my life. The quality of used vehicles and the life left in them are so much greater than even a new car back in the day. You know that old saying, “They don’t make ’em like they used to”? Well, thank God for that! But a $15,000 pre-owned car in today’s world? That’s a nice car!