Meet our two characters, Mike and Shaun. Both have $12k set aside for a down payment. Mike goes out and starts shopping for a brand new whip. Shaun decides he is going to get something nice but used.

Mike's car:

- New off the lot

- Purchase price: $60,000

- Down payment: $12,000

- Loan details: $48,000, 60 months, 4.0%

- Monthly payment: $880

Shaun's car:

- Used

- Purchase price: $30,000

- Down payment: $12,000

- Loan details: $18,000, 36 months, 4.0%

- Monthly payment: $530

First 3 years:

Mike makes his $880 payment every month. Shaun makes his payment of $530, and invests the $350 difference every month.

Next 2 years:

Mike continues to make his $880 payment. Shaun now has a paid-off car and invests the entire $880 these two years.

At the end of 5 years:

(assuming 8% annual investing return) Mike: $0 Shaun: $39,490. But here's where it gets crazy.

Over the next 30 years, the $39,920 Shaun invested will grow to $397,000. That new car Mike wanted cost him over a quarter million dollars and likely years of retirement.

If you enjoyed reading, you can find most posts like this on Twitter from @cadeinvests

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