Why Your Expensive Luxury Car Doesn’t Impress Smart People (Or Me)

luxury carA few days ago Jennifer commented on a post I had written entitled 8 Big Reasons Why You’re Getting an F in Personal Finance 101. She was lamenting the sense of entitlement she saw in many people. Here is an excerpt:

“I know a woman who is a single mother and hit up her friends for money to replace the engine in her SUV. I declined to participate because even though I have a lot more money than her, I have a 9-year-old car that’s worth maybe $2000, and hers is worth about $30K. Her engine costs more than my whole car… I will admit that peer pressure is real though. I’ve had many people mock my car, and if I cared, I would run out and get a fancier one.”

Ah, Jennifer. Let them mock you all they want because those people clearly have a misguided view of how the world really works.

Yes, it’s true a large segment of society still believes that the car a person drives is a status symbol that accurately reflects the level of financial success he or she has achieved.

The truth is smart people know nothing could be further from the, er, truth. (Dang, I hate when I do that.)

As far as smart people are concerned — and even dummies like me — the sticker price of somebody’s car can never be considered a reliable indicator of financial success.

If you don’t believe me, just look around; the proof is everywhere.

For example, here in Southern California I see teenagers driving BMWs, and Lexuseseses (or is it Lexi?) all the time. I don’t think most of them hit it big blogging, or own wildly successful businesses at that tender age.

I also see people working in jobs that pay $30,000 per year driving Infinities. Is that supposed to be impressive?

More like stupid.

Heck, Jennifer’s friend owns a relatively-modest priced SUV and she couldn’t even afford to get the engine fixed.

So clearly, one cannot determine the size of a person’s bank account merely by the type of car they drive.

I know a couple that used to live in my little neighborhood community who drove brand new his and hers BMWs. Guess what? The bank foreclosed on their house a while back and they had to move away. Although I do not know the exact circumstances that led to the foreclosure, perhaps if they drove more modest cars that didn’t require monstrous monthly payments — or better yet, no payments at all – they might still be living in their home today.

Although we can truly afford to drive almost any car we desire, The Honeybee and I get around in a 2001 Honda Odyssey and 1997 Honda Civic, respectively. Our cars are not glamorous, obviously, but they are well-maintained and, best of all, they’re paid for.

Although she didn’t say so, I bet Jennifer’s car is paid off. I’ll also wager the vast majority of newer luxury cars on the road aren’t.

And while those over-extended luxury car owners will continue to be saddled with some hefty car payments over the next several years for the privilege of traveling to their jobs in style, the rest of us will continue driving our Honda Civics, Toyota Corrolas, and Ford Focuseses-es (or is it Foci?) and use the money we save for our relentless drive toward financial freedom.

And guess what? Most of us won’t give a damn what the others think either.

If I had to give any advice to Jennifer on this subject, I would tell her that she should never fear peer pressure for owning a “beater” for a car.

Financially savvy people actually consider it a badge of honor.

Photo Credit: Prayitno

(This is an updated version of an article that was originally published on May 19, 2010.)

Comments

  1. 1

    says

    My husband once looked around our modest neighborhood and asked, “How these guys affording these cars?” I pointed out that most of them probably had 6 or 7 year loans for their cars, and were living paycheck to paycheck. The same is true for almost any fancy purchase. Big TVs can be financed, as can almost anything that you buy that tries to say, “Look at me; I’m awesome and living large.”

    • 2

      Weldon Gebhard says

      Just love this subject. More people get in financial difficulty here than any other place.
      I have never bought a new car
      I only pay cash for a car
      I bought my first car for $50 and started working on it MYSELF. Learn to do most work.
      I believe that the BEST car is a company car. You know the company provides it.
      I keep most cars for short periods and let others take the big depreciation hit
      I now drive an 07 cadilac, my most ever luxury car $16,000 and will sell it the end of this year
      I am 74. My wiife and I enjoy life vacationing with my large family. I can afford it.

      • 4

        brandy8652 says

        I love this article..I think like most of you car notes is what keeps people down financially..I knew I had really turned a corner when they pricey cars and flashey name brands did nothing for me anymore..I have more invested,feel more secure and never have arguments over money in my marriage..Not saying having Money solves all problems but it does give you one less thing to worry about when you figure it out and get spending under control… : )

    • 5

      Mark says

      this is not always the case, i own an audi tt and paid for my car in full in cash no loans i dont live pay-check to pay-check hun, I work really hard to get the things i want in life and dont really watch what other people are doing.
      In my humble opinione you and your husband should have put a little bit more effort into your schooling and then you wouldn’t have to pass judgments on your nabours you to could also buy the things you want :)

      • 6

        Fishdad says

        She said “most”. You are obviously an exception to the rule. I agree with her that they are probably overextended. I don’t see that as a judgement on her part. She is just stating fact. “Hun”!

        • 7

          Daniel Guzamn says

          I came across this page googling “people that buy expensive cars that have never moved out of parents house”. My dad has so many neighbors that have kids in their 30s that have never moved out and drive luxury cars. I think it’s pretty pathetic. I went to college and got through with no debt. I struggled to find a job so I feel a little financially behind but I still managed to move out and buy a car. I really wanted the most expensive Audi A6 which I can afford to finance but I ended up financing a Scion. I’m glad I did, because I have been through some financial disasters that didn’t allow me to save much money. Financing the Audi could have made me dip into my savings. I really want my Audi but I’ll wait until I make more money and maybe aim higher. One thing that I don’t get is people that live at home and make as much money as me but don’t have anything to show and are completely broke.

      • 9

        ToMarkLearntoWrite says

        Mark, that is not believable. Your statement about putting more effort into schooling is laughable. You begin your sentence in lower case. Your grammar is so poor. “i” is “I”. Audi is capitalized. Opinione?

        Mark you should have put more effort into school.

      • 10

        Nabours? says

        Don’t forget he spelled neighbors as “nabours”. That was the worst one! He really thinks people believe he went to school. Not! Go back to school Mark.

        • 11

          chas says

          Mark..Listen up.Ok? I never got hardly any book larnin’ ok? ..To make money in this world does not take proper spelling or grammar..It takes an entrepreneur spirit ..Your either born with it or you learn it in the school of hard knocks..Not in College or university..I only got a grade five .But I made a fortune in the Biz world with lotsa educated like you Working for poor no book larnin ME.

    • 12

      Bob says

      An overwhelming majority of americans are poor and living in pathetic places, earn minimum wages and happy with what they got. As Romney said they are insignificant, junk population, they don’t matter. People who buy nice cars, myself included, have different life attitude. First of all, I pay for a great car because I appreciate its qualities. And because I am well educated and hardworking engineer who wants the best. You drive a piece of junk and take a pot shot on me, someone who worth ten times you do and creates value ? Use to be aristocracy dressed differently and rode differently. Today we are crop of society and differenciate ouself from junk population. It not for you to admire, it is for us to recognize one another in midst of rest of you. And I started in this contry as H1B and many smart and awesomely educated and determined people did. Young americans who went to college for political science or history today serve my coffee. Get it?

      • 13

        BobIsIgnorant says

        Don’t listen to this guy. I have no idea how old this webpage is, this comment may be years late, but all I have to say is Bob is ignorant. If he was as educated as he says he is, then obviously he somehow never took a sociology class. If you understand the structure of capitalism, it’s that not EVERYONE can succeed and make big money. You’re basically offending those who the system purposely defeats and makes unsuccessful. Just because you work hard, doesn’t mean you’re guaranteed success. There are only a limited number of high paying jobs, just look at the economy, it’s 2014! What I think the author is trying to say is that some people are arrogant and think having more $ makes them a more prestigious person. So I’m guessing that makes you junk compared to celebrities who make millions? The same celebrities who make millions beign stupid AND uneducated? Face it, there’s thousands of celebrities who make 10 times what you make, yet their IQ is below 100 (just watch Jershey Short). What the author is trying to state is that people care too much about image, and invest money THE DON’T REALLY HAVE into a nice luxury car. They could spend money more wisely, buy used, then save up for more important things…then maybe a time will come where they actually have spare money to buy the car they want. She’s referring more to finiancial management. And how dare you call people with low incomes “junk”. You should admire these people for making the best of what they have. They’re unlike you, you’re a man who is vain. Your happiness comes from your belongings and trying to “be above others” with nicer things. Some people can have nice things and still be humble, but you’re obviously not such a person. I’d rather make friends from someone from the “junk” population – someone who works hard given what they have, has close family ties, and has the will to endure a difficult life, rather than a person like you – thinking material objects decide how great of a person you are. You probably have no one’s respect and everone thinks your a douche behind your back…yet you hold your head up high thinking you’re so great because of your nice “things”. Heck, I’m sure you’d say Jesus himself was part of the junk population!

      • 15

        Sam to ignorant Bob says

        My family also came to America with less than a dollar and a dream. Both my parents earned their PhD’s in this country and made excellent money over the years. They drove VOLKSWAGONS!! I myself was working for one of the biggest software companies in the world and was making the big bucks, I drove a Toyota Echo. My fellow employees all joked me calling it an “Eco” as in economic… I took that as a compliment. When the Tech boom busted, they were all worried about impending, and much to their dismay…layoffs, I had a huge savings account, stocks/bonds, 401K etc…and Toyota Echo that was paid for. I still laugh real hard when I see you “aristrocats” pulled over on the side of the road with your broke down Jaguars, Beamers (BMW=Bought My Wife) etc.

      • 16

        Cru says

        Your poor deluded fool. Enjoy the “best” you “crop” of society.

        “You drive a piece of junk and take a pot shot on me, someone who worth ten times you do and creates value ?”

        Two undefined references to subjective value. Seriously, GFY, you’re no better than anyone else you chump.

        • 17

          Michelle says

          ‘Bob’ if he really exists, shows the coming civil war among the haves and have nots….regardless of education and training. Folks there are no guarantees anymore.

    • 18

      Scott says

      Well, this article reeks of sour grapes and is rather generalized. I’m 26, own a 335is and went for engineering on a full-ride to a top school.

      If I want a BMW, while meeting all my other financial goals, I can have a BMW. Sure, there is a lot of money behind me from my parents, but I can easily afford 45,000 on the car and put 25000$ down while meeting all of my obligations.

      Not everyone is ‘trying to impress’. I’d never drive anything less. Sorry you’re poor and run a blog. Your husband sounds like a penny pincher.

      Oh, and I requested an M5 from my father-in-law when I get married, since he owns 2 companies.

      Also, house payments are a middle-class problem. Get a job, hunny.

      • 19

        Len Penzo says

        “…this article reeks of sour grapes.”

        If advocating personal responsibility is sour grapes, Scott, so be it.

        “I’m 26, own a 335is and went for engineering on a full-ride to a top school. Oh, and I requested an M5 from my father-in-law when I get married, since he owns 2 companies.”

        Wow. Bully for you. And we needed to know all that information because????

        I know. You aren’t one of those folks who likes trying to impress others. (From one engineer to another.)

        • 20

          Vernon says

          bah, bmws!? I drrive a toatally alpha 2002 MALIBU!!! jokes aside, is a new impala really not classy enough? their $30,000! and their as nice as a bimmer. 2008 impalas, while archaic should be fine enough. sorry in advance for any word issues, PSPs suck for typing.

      • 21

        Cru says

        “I’d never drive anything less.”

        Hahaha, your world is going to be so sad if even a hiccup disturbs your lifestyle.

      • 22

        MC says

        Wow, you are a top-notch d-bag. Must be nice to have Daddy funding your BMW. Hopefully someday he will donate your inheritance to charity and you will find out what engineers who don’t have trust finds drive. I’ll give you a hint, it’s probably beige and made in the Midwest by a Japanese company.

    • 23

      Terry Indebted says

      Sometimes I think people don’t understand what they are doing. How can they take loans for the passive consumption? If you take, it is only for the business.

  2. 24

    says

    I get mocked all the time for being a young girl, driving a 11 year old minivan.

    Seriously, I couldn’t care less.

    I just smile and if I really get pushed, I say: I bought it in cash and it works beautifully.

    (And it does!)

    I won’t lose any sleep over people thinking I’m cheap.

    • 26

      Don says

      Just as you dont care what people think of what you drive why would I care about what you think of what I drive. I love fast good looking cars and bought one. So what? Its 9 years old and puts a smile on my face when ever I drive it. Because you choose to drive something different makes you better than others in some way? Please. Get over yourself!

  3. 27

    says

    There aren’t a lot of things people can do to save money that REALLY save a lot of money. Turning out lights when you leave the room, eating out a little less, etc, are good, but they don’t add up all that fast.

    Choosing a cheap car ranks right up there as the biggest.

    Mine: 1999 Saturn SL2, 150K miles, no car payments for last 7 years.

  4. 28

    says

    @Miranda – too funny. My wife and I used to laugh at the fancy luxury cars at our APARTMENTS too, hah.

    @gn – Excellent point! Once I started driving paid for cars I could save and invest w/out breaking a sweat. So fun! It’s too bad most people will go on thinking that a car payment is a fact of life (I know I used to believe that).

    I knew I’d turned the financial-success corner and headed the right way when I started looking at BMWs and thinking, “man, glad I didn’t pay for that!” Awesome post!

  5. 29

    says

    Thanks Len for the shout out! I agree with you that an expensive car does not equal a fat wallet. I see college age folks driving new sports cars all the time. While it may be their parents bought it for them, that says a lot about the smarts of their parents!

    My 2001 Mazda Protege is paid off, since my husband and I paid cash for it at the dealer (it was used then). Well, we sort of paid cash. They wouldn’t accept actual cash and it was too late to get a bank wire on a Saturday, so they insisted we take it home without paying a dime! We did wire the money on Monday of course :)

  6. 30

    says

    I’ve never owned a new car and the peer-pressure is very real, especially because I’m in management. I work at a medical device company and the lot is full of BMWs, Mercedes and Lexuses. I drive a 1996 Chevy Cavalier that I bought off the receptionist, when she upgraded to an SUV.

    I just can’t see dumping a huge amount of money into tranportation. Cars cost too much and depreciate too quickly. Although, I may break down and buy my first new car, when electric cars are finally available. I would love to drive something with lower maintenance and fuel costs.

  7. 31

    says

    What is impressive is when you can afford to buy your BMW cash ;-)

    I love nice cars but they are clearly a huge source of expense. I just bought a RX-8 but instead of paying a brand new one at 30-35K, I bought a 2004 for 12K… I then have the pleasure to drive a nice car without having huge car payments attached to it :-)

    When buying a car, you also have to consider if you make enough money to pay for its maintenance. Tires, oil changes, gas, insurance, etc. they add up in no times!

    • 32

      A K says

      absolutely reasonable way of thinking , i do the same thing , why should i pay for a brand new car when i can buy it 3 or 4 years older with half the price ? :) .. but i have another thing here to mention .. am living in a country where where we buy cars with 10x of its original price , n am not exagerating ! we pay 200% customs on european cars , anyway … i own a bmw which believe ladies and gentleman i regret that i bought this car …. doesnt worth even half what i paid for it … go figure that the car didnt hit 100 k miles n i had a faulty gearbox that gonna cost me around the 10 thousand dollars to get it replaced !!! anyway what i am tryin to say here that expensive cars doesnt mean that it got the reliability the people thinks … its just u will get the looks you want n have some prestige while u cruising with yr fancy ride but on the other hand if u smart enuf u will think that this shit is worth the money u are spending :)

  8. 33

    says

    Funny how one of the worst investments possible is one of the most popular! The other day I saw a nurse in my neighborhood get into here new corvette and shook my head as a rode my bike past.

    Too bad there aren’t more smart people out there cause I see a ton of high end cars where I live.

    • 34

      Mr America says

      I find all of you to be extremely rude and perhaps jealous is the better word just because some of us drive nice expensive luxury cars . Your answer to living on the edge of poverty is to ridicule others by insinuating that those of us fortunate enough to earn high 6 digit incomes because in most cases we finished college or maybe took over successful family business. Did you ever stop to think that not everyone lives beyond their means ? Do you really feel that by stating ” Too bad there aren’t more smart people out there ” forgives you for earning less or spending less than you really wish you could ? I have friends who change their new cars ( yes cars – not car ) every three months because to them spending $ 25000 is like you spending $ 250 . Now, before you begin blogging that their money would be better off spent curing the ill or perhaps giving to charities , please be advised they already do that .

      • 36

        SteveTheHawk says

        The article doesn’t state that every single person driving an expensive vehicle is living beyond their means. It states that many of them are, and that is absolutely true. People spend money they don’t need to spend simply because they want the world to know how important they are in their fancy car. I drive a small economical car though I could definitely afford a nicer one. I chose my car because it gets me where I’m going dependably and allows me to keep a lot of money where it belongs…. in my pocket. I guess if you don’t like it when people express their opinions of conspicuous consumption, I don’t know what to tell you. I guess you can believe that I’m jealous of you. The truth is, I grin when I think about how much money you spent that I didn’t.

        • 37

          youarehilarious. says

          america is so complex.
          In east asia is much more simple.
          either you buy a sls amg using a single day income or you can’t afford one forever

      • 38

        MIZ says

        “Mr. America”,

        because you are so offended by the article, it is obvious you are not truly wealthy, and are probably struggling with your finances and being able to afford your fancy car. You are so quick to call it “jealousy”, which is what all the pompous wanna-be rich people say. Like the 20-something-year-old, who *leased* his first BMW and is still taking money from mom and dad to help him out.

        Truly wealthy people know the difference, and understand what it takes to make money and hold on to it. No truly “rich” person would be offended by this article. You mention your wealthy friends who buy new cars every three months – there is a reason they aren’t posting here, and you are. I bet you are trying everything you can to “keep up” with your rich friends. trying to show them that you can appear to be wealthy too, and be in their elite circle. Yet I have a feeling you are like the little dog that follows them around all the time, wishing he was one of them. so sad. I think it is you who is jealous of someone who is happy with what they have, and is financially free.

        • 39

          Kelly says

          Miz got it in one. Mr. America is a wannabe richie who *imagines* himself rich and, as such, is offended by this article. If he had a 6 figure income, he wouldn’t give a damn. It’s that simple.

          Sorry we called your bluff, Mr. America.

      • 41

        Rob Lewis says

        Nice try. Nobody with the smarts to earn a high 6 figure income would get a new car every 3 months, too much hassle.

      • 44

        William says

        I think you missed the entire point Mr. America. I believe the author of the article is stating that if people were happy with what they owned, they would not worry about what the Jones’ drove.

      • 45

        Brian says

        I make high 6 figures after graduating from university. I work long hours and through long weekends. By 25, I’ve owned numerous cars that people would call high-end. But just two weeks ago, I’ve sold my beloved German performance luxury vehicle and now I rely on my beater 9 yr old motorcycle. Cars are a financial black hole all together and as a status symbol? HA. Only for those who need to stand a little closer to the urinal than others.

        • 46

          DiDi says

          when i was 24, i bought a 100k car. the car stayed in the garage most of the time and while it was awesome to drive, it wasn’t worth the $50k i spent in 2 years before i finally sold it. i also went on ridiculous vacations, staying at 5 star hotels, buying one way tickets to random places around the world just because i could afford it and came back when i was ready to go back to work.

          i did stupid stuff like this for 4 years while earning an avg of 450k/year (i got lucky – tech). i totally regret doing it because i literally have saved only 300k. i should have had 1 MILLION in the bank by now and bought a condo in cash (well, that would be stupid at today’s rates, but you get it). it’s not every day you land in a company that goes public. i squandered that money like it was nothing. i had fun, but those memories have faded. i spent 200k/year just to have ‘memories'; when i die it won’t mean anything.

          in retrospect, i would gladly be driving around in a beater and a more modest lifestyle for just a few more years. and when i stop working 20 years before everyone else, they won’t be talking about the beater i drove!!

          i respect those of you who make < 100k and can manage to save 20k a year.

          • 47

            Len Penzo says

            I don’t know many adults who didn’t wish could reallocate some of the money they spent as teenagers and/or twentysomethings. I blew upwards of $25,000 on stuff related to a rock band I was in when I was younger. I often wonder if I should have just invested that money instead. It’s all part of growing up and learning via the school of hard knocks!

          • 48

            Andy H says

            If I made $450K a year I would save up a million and disappear off the face of the earth. I’d go buy me a little cabin somewhere and just live off my savings. Who cares about a condo? The most precious thing in the world isn’t a thing, it’s your TIME. But then I guess most people wouldn’t know what to do with that much free time if they had it.

      • 50

        Free of debt! says

        Luxury car owners are saying to the rest of the world:
        I need a lot of attention for total strangers
        I want to appear to have more money than you
        I don’t have to answer to any one else for anything I do
        I don’t care about filling the air with pollution
        I don’t care about the rest of the world
        if my car is too big for the parking spot, that’s just too bad for everyone else.

        You are not envied, I could buy one too, but as a responsible and mature adult, I don’t want one. I don’t need the attention, or envy of others to make my day.

        • 51

          Qflux says

          Why do people who choose to drive an older average car want an award for it? And do you, and those like you, really believe that the moral superiority complex you’re displaying is any less ugly and obnoxious than what you’re attempting to critique?

          A cheap old car is certainly less efficient than any newer one, so leave you BS strawman “Eco” argument out of it

          Shocking as it may be to many of the self righteous commenters here, many folks have different priorities. People are entitled to find something in life they enjoy. For some its a car that they find pleasurable. For others maybe its a hobby or travel.

          People that obsess over the thoughts and actions of others, and spend all day rationalizing this behavior, are the *truly* repugnant ones and the real blight to humanity. And yes, this is you “fee of debt”

          The vast majority of humanities WORST problems stem from people rationalizing aggressively projecting their own value system and choices onto others and marginalizing their target by making broad and ignorant assumptions and twisting “data” to “prove” their subjective belief.

          Focus more on worrying about YOURSELF

          Very few of the commenters here proudly patting themselves on the back and rewarding those who agree with them while collectively stereotyping their chosen target are coming off as anything other than nasty and hateful. Good job!

          • 53

            IfinallyHaveaNiceCar says

            Well, said.

            People are acting like they are curing cancer by driving an older vehicle. Bravo for saving some money! Don’t worry about what other people are doing and keep focusing on your goals.

            It is so irritating to read so many smug comments.

          • 54

            DriedSquid says

            Excellent post, Qflux. I cannot believe I was sucked into reading so many of these posts, but I was just shocked at how passionate and even angry people are about, well, something that just doesn’t matter that much. And now I am actually writing something, instead of just shaking my head in disbelief and moving on to what I was originally searching for.

            There are, of course, very rational arguments for not buying higher-end vehicles. However, the title of the article is intentionally caustic, and attracts those who believe a particular way. We certainly do live in a prosperous and care-free society when time and energy is spent on getting worked up over the guy who drives a better car than you. Seriously. It’s just a car. Just a method of transportation. If some people foolishly spend more than they can afford to buy a luxury car — or even a very modest vehicle for that matter — what is it to you? I was equally surprised at people who claim they drive expensive vehicles, and attack those who do not.

            Some of the comments remind me of an episode of South Park where the new status symbol for the town became hybrid vehicles. They would pat themselves on the back for being smarter and caring for the environment more than everyone else. The town was eventually destroyed by a smug storm that drifted in from California. Silly. Absurd. But sadly, pretty damn accurate apparently. I drove a Prius (which was a Pious in the episode) at the time and thought it was funny as hell.

            It is fascinating that in my experience, I was picked at for driving a Prius for all the years I had it. I just jabbed right back. It did not make me lose sleep at night worrying what others thought. I like what I like, and that is all that matters. I loved the car. I only parted with it after my mother had a wreck and totaled her van. She wasn’t going to be able to buy anything decent with the money the insurance company could give her, so now she has the Prius. I know that car inside and out and it will run for many more miles without an issue. I ended up buying the incredibly evil BMW to replace the Prius. I know it’s evil, because I’ve seen it try to swerve at poor, defenseless puppies and little old ladies on the side of the road. I can’t prove it, but I think it smokes unfiltered cigarettes at night and farts repeatedly in a determined effort to further damage the ever-weakening ozone layer. But it is so pretty. So I try to overlook those wicked, unsavory personality traits. I bought her used, so maybe she is just psychologically damaged from her previous evil, arrogant owners. Perhaps I can help her change her wicked ways. Perhaps. But maybe… just maybe… she will turn even me into another reprehensible douche that you all love to hate.

      • 56

        BRAD says

        Telling them how to spend their money and how they are not “smart” if they dont. LISTEN CLOSELY, NO ONE LIVES FOREVER, TOMORROW IS NEVER PROMISED. MOST OF YOU ARE SAVING UP FOR A DAY THAT MAY NEVER COME!. WHY DIE WITH MILLIONS IN THE BANK YOU WORKED SO HARD FOR AND LETTING SOMEONE ELSE ENJOY IT. I MEAN, WE DON’T MAKE MONEY SO OTHERS CAN SPEND IT RIGHT??? WHICH IS SMARTER, HAVING DIED WITH A PILE OF MONEY NEXT TO YOU OR DEAD KNOWING YOU ENJOYED LIFE, BOUGHT THE THINGS U WANT CAUSE U WANT TO.

    • 57

      ccm6543 says

      You’d be surprised how much “just a nurse” makes. I have been out of university for just 3 years and could easily afford a corvette and the associated costs no problem, be careful about the assumptions you make about people. On another note, I see the point of your post, and agree with you — too many people who own expensive vehicles can’t afford them.

      • 58

        William says

        Nurse, Assumption are people’s realities and assumptions predicated by experiences. One another note besides the current subject of the author’s article, as you might know, we live in a volatile economical times. With every bill you have including that really spiffy car, take all of your bills and multiply by 6 months. If you lost your job today, which possession would go first?

    • 60

      Captain Awesome says

      Let’s say the world ended tomorrow, that nurse got to drive a Corvette. You rode a bike. I don’t blame you for being jealous.

      • 61

        Stratman3 says

        Precisely! I’ve always encouraged people to do the things they want to today because there may not be a tomorrow for them or any of us.

  9. 65

    Mark says

    I hear you. Just after college I paid $400 for a 1991 Geo Prizm with 97k miles. While it is definitely one of the most humble cars I’ve ever seen, it is also mechanically sound and (with proper care) should last many years to come. In the meantime my wife and I have been able to achieve most of our financial goals (working on Baby Step 6 now, paying off the house), and I am putting $200 a month aside as a car replacement fund. Any guess on what I’ll be able to pay CASH for when my little Geo dies?

    • 66

      says

      Man, those are great cars. At one point my dad, my mom and I all had Prizms. I sold mine after 10 years because I started working from home, so we no longer needed a second car. Then my dad finally got rid of his 20-year-old one because, though mechanically sound, it was rusting to bits. My mom still has her 2002 Prizm, and considering her record with cars, she’ll probably have it for as long as she’s able to drive.

      Anyway, I think at $400 for a Prizm with only 97k on it, you got a great deal.

    • 67

      Gus says

      LOL. If you have to drive a Geo I don’t know how you can afford a wife. Unless you can’t support her and she actually supports you. I can’t help but to laugh at everybody’s comments. I choose to drive whatever I feel like any day out of my 11 cars. Yes insurance is expensive but I am a car guy. I enjoy paying for my cars (all in cash of course) but I hate that I have to pay insurance. Bottom line, some people like cars some don’t. Nothing wrong with that, for example I think it’s stupid to pay crazy amounts of money on education actually. Basically we have libraries and google. To me it’s easier to figure out stuff I need to know than to learn what somebody else thinks I should know. Basically you can provide any good or service without a middle man (boss). For some people it’s very important to go to an ivy league school and pay a lot of money for it. Me on the other hand I like to use ive school graduates to make me money with their training and talents. In conclusion, we all have different visions and priorities. Some people will rather enjoy life now some later, some love cars some don’t. Some like the idea of a Prius and some of us would rather have a car with a nice roaring V12.

      • 68

        Charlie says

        Finally, someone who makes sense. Spend your money to make yourself happy. If it’s vacations, hobbies, running, working out, or racing cars it just depends on what you want to do with the money. Whats the point of making money? To live a fulfilling life.

    • 69

      Dave says

      So you’re going to take those hard-saved dollars, that nice chunk of capital that decently vested could be earning you 5-7% a year and turn it into a …. depreciating asset?
      With excellent credit a used car loan will hit you 2.1-3%, you can borrow money and still potentially be better off. Just because you don’t like the idea of a payment don’t let it blind you to opportunity cost. Evaluate carefully.

  10. 70

    says

    Yeah, I live in an apartment complex: Nicer than some but not luxury living by any stretch of the imagination.

    And yet…

    There are an awful lot of nice cars. Granted, I consider a nice car to be anything above $30,000-$35,000. I don’t know how people measure cars in the real world. I just know that I’m perfectly happy if our next car is a Hyundai or something similar.

    This whole car:living quarters ratio kind of blows my mind. Until I remember that there’s probably a reason these people are renting, and it’s sitting in their parking space.

    • 71

      says

      @Miranda: Great point about other large purchases. You know, I look around my neighborhood and think the same thing sometimes. Especially when the homes have not one, but TWO fancy cars.
      @FB: Hi, Me! :-) Ha! What are YOU doing driving a minivan? (Just kidding.) Seriously, minivans are very practical. We love ours. It can be used to haul large items or lots of people in real comfort. It ain’t sexy, true. But it’s a great way to travel – especially over long distances! :-)
      @gn: You are right. It is a real luxury not having to make a car payment every month for five hundred dollars or more. That is a VERY significant amount of money that can be used to quickly build emergency or your retirement savings accounts.
      @Deacon: LOL I assumed I was the only one who thought that way when I see those luxury cars.
      @Jennifer: Thanks for sharing your story – for once I didn’t have to think too hard for an idea! LOL That car dealer took a bit of a risk, yes? If you had crashed the car over the weekend before you actually wired the money wouldn’t they have been on the hook to pay?
      @Bret: There are a lot of high-end cars where I work too. The upside for me is when we have to travel locally, most of the time nobody wants to ride with me in my Civic so I get to ride with the engineers who bought the luxury vehicles! :-) I value a car by its ability to get me from point A to point B safely, reliably, comfortably and efficiently. Fortunately, there are lots of cars on the market (both used and new) that can meet those requirements for a relatively small amount of money.
      @Mike: I know you didn’t ask me, but right now I spend between $1500 and $2000 per year on maintenance – that ensures my car continues to run like new. Yes, being able to pay cash for a BMW is impressive! On another note, my next car will probably be almost new. Maybe a year or two old, tops. That should result in some significant savings since, as Bret alluded to, cars depreciate a good chunk of their initial value when they are driven off the lot.
      @Ryan: My old boss owns a Corvette and that thing seemed to always be in the shop. They are expensive to maintain – even for mundane things like tires.
      @Mark: It all depends on how much cash you have! If your Prizm goes another 7 or 10 years, you should be able to buy something very very nice!
      @Abigail: It’s all about priorities, I guess. There are folks out there who consider their car more important than their living arrangements – or being able to build a bigger nest egg, for example! To me, a car is near the bottom of my “priorities totem pole.”

      • 72

        Qflux says

        Right… The last point s the ONLY one for you and your self righteous commenters.

        So let’s make a nice list.

        Everyone here of like mind, plus you, list what you DO spend money on.

        Then everyone who feels its “low priority” can attack you for it, criticize you, make ignorant assumptions about you based on it, and lord it over you.

        Oh let me guess…

        All of you ONLY spend on food, shelter and bare necessities and hoarding cash for the apocalypse right?

        Well congratulations! You win the superhuman award! When you die your kids will thank you when they blow through it, or if you have none, the govt will thank you when they do.

        Not everyone you see doing something YOU judge as “a waste” is irresponsible.

        What am immature and ridiculous attitude

        • 73

          Len Penzo says

          The ONLY point of this piece was that those who drive luxury cars they can’t afford, shouldn’t do so.

          So why are you being so emotional, Qflux?

  11. 75

    says

    @Len: Absolutely the dealer took a big risk! The funny thing is they INSISTED we take it home. They figured the bigger risk was me changing my mind and not returning. I might have been a deadbeat and never paid, and then they would have had to repo it. This was back in 2005 when US lenders threw money around like candy.

    Glad I can help you out with an idea. You let me know when you need another ;)

  12. 79

    says

    i live in LA also and it is hard not to see some of the most expensive cars in the world here.

    it is one of those things where you hope you don’t fall into the my car is nicer than yours trap.

    • 80

      says

      @Jennifer: LOL! Don’t give up all your good ideas!
      @James: Unfortunately that’s how a lot of people think out here, James – even if they can’t afford to try and impress the impressionable.

  13. 81

    says

    I like to relate peer pressure, or keeping up with the fictional “Joneses” as being part of the lemmings. Why jump off that cliff with your lemming friends when you know better. Now if only I could get my husband on board with the whole “you don’t need a luxury vehicle” point of view!

  14. 82

    Spedie says

    I am happily driving my 2007 Toyota Corolla CE, 5 speed manual transmission, around! It is paid for! It is reliable! It gets great gas mileage! If the battery dies or the alternator goes out, I simply start it rolling, jump in the car, put it in second gear and pop the clutch!

    It is very low maintenance. It even has a timing CHAIN, not a BELT.

    I love my car. At my income level (well over $100K), I could be driving a BMW or Lexus….especially since I am on Baby Step 6 and have been debt free, except the house, for quite some time.

    Love my Toyota…it probably won’t die on me for at least 10 more years….maybe 15. Heck, at 40K miles, I just got the engine broken in….

  15. 83

    Kevin M says

    Love this post. I drive a 1998 Jeep Cherokee that’s been paid off for years and laugh at all the people driving BMWs, Lexus, or whatever, knowing probably 2/3 can’t REALLY afford them.

    Plus, I see them so often, it makes them less appealing…why pay $40k for a car a bunch of people drive when you could spend $20k for an Accord or Camry (which are basically the same cars anyway)?

    • 84

      says

      @Spedie: My Civic hasn’t crossed 120k miles, even though it is on its 14th year – but that is going to change since my commute doubled about six months ago. Still, I don’t see why I can’t squeeze another 130k miles out of it assuming I keep it well maintained (or maybe even longer).
      @Kevin: I’m with you, brother!

  16. 85

    says

    I am in Cairo and a lot of people here dress in Western style, a lot of people wear arab style gowns and some just mix it up. The thing about the gowns is that they are comfy, protect from the sun and are cheap as hell…. A pair of Levi’s costs the same (or maybe slightly more) than a pair of Levi’s in USA, that is a LOT of cash in Egyptian pounds but people still save the money to buy them so they can look impressive. I know it’s extreme but I have almost considered wearing traditional Arab wear out of protest against the consumerism that takes over everything!

  17. 86

    says

    Completely agree with the sentiments of this post. Since most cars are financed anyway, when I see a new car, I often think to myself “Yuck, I wonder what the payments are like on that thing!”

  18. 89

    says

    It’s a bizarre sort of world we live in if people consider it better to impress strangers with an expensive car than to suck money off their friends just to keep it on the road.

    Sometimes I think I’m from an alien planet. :(

  19. 90

    says

    We all love to look at that beautiful Ferrari or BMW that zips down the freeway at breakneck speeds. It is usually an indication of wealth but people who spend 6 figures on a vehicle probably aren’t especially wise with their money.

    Thanks for the post. It has been nominated as the top five posts of the week on my website! Congratulations!

  20. 91

    says

    The obsession people have with cars in the US is interesting to say the least.

    I’m not saying I wouldn’t ever drive a luxury car, but it’s simply not going to happen until it can be paid for in cash.

    I currently drive a 1996 Ford Explorer with 196,000 miles and I’m hoping it’ll last me through the next 4 years of school. The engine was replaced at 176,000 and it’s been running great since then.

    What I don’t get is that people will pay so much more for basically the exact same vehicle. Yes, I think you are much more successful because you drive a Lincoln Navigator instead of a Ford Expedition.

    I won’t lie though, sometimes I give in to consumerism and think about how sweet it would be to drive an Escalade or Telsa Roadster (payment free of course!)

    • 92

      says

      @LittleHouse: Some folks simply value nice cars more than others. If your hubby values them more than say a very nice vacation every year, then you’re going to have a lot of work ahead of you!
      @Monevator: That story really was amazing, wasn’t it? I would never have the stones to ever make a request like Jennifer’s friend did.
      @Conrad: Thanks for the nomination! I’m glad you enjoyed the post, Conrad!
      @Ryan: I’ve been a passenger in a lot of luxury cars, and they ARE really nice. But when I sit back and try to determine value for the money, I can never justify buying one. That’s just my opinion. And if some people think that makes me cheap, so be it. :-)

  21. 93

    Macs says

    I don’t particularly like cars, and certainly wouldn’t measure my ‘worth’ against my vehicle. I think mine is the ‘top beater’ of the page, a 1989 (yes, that’s twenty years old!) VW Golf, solid as rock and still running smooth at just over the 100k miles. It cost me a whopping £300. I like that it’s old – it’s purely mechanical, no computer bits and bobs, no irritating voices if you don’t belt up etc. But most problems I can fix myself… well, some problems, I’m no mechanic … but I can manage my own oil changes and filters etc. It’s well battered (let’s say the previous owner wasn’t too good at cornering!) so all my work colleagues are constantly nagging at when I’m going to buy something newer. Simple – I’m not! It’s not broken, nothing to fix. But I do enjoy the occasional dig when they have to ‘pop out’ to buy a £300 sensor, or spend £100 on an oil change, or need a lift home because their computer won’t let them drive. “So, when you going to get rid of this expensive white elephant and get a car that works, then?” I ask.. Ah, schadenfreude.

    • 94

      says

      You definitely win the prize among the readers for oldest car, Macs. Congratulations! The joys of a purely mechanical car are many, to be sure. When I was a teenager a lot of girls I knew drove VW bugs and they were so simple to work on that they often took care of their own repairs too.

      But, Macs, 100 pounds for an oil change? That’s like, what, $160 right now? Are oil changes really that expensive across the pond?

    • 95

      Gus says

      Wow. It’s nice to be able to charge that much for an oil change. I need to look into setting up some oil change stations in Europe if this is true. Also worth looking into producing aftermarket sensors for cars or importing them if you guys don’t have access to them.

  22. 96

    Macs says

    “But, Macs, 100 pounds for an oil change? That’s like, what, $160 right now? Are oil changes really that expensive across the pond?”

    If they see you coming… lol

    To be honest I don’t know the actual cost, as I never do it. But I’m sure £50 would be a lower limit, plus the hassle factor of being without your vehicle for the morning. Compared to maybe £5 for new oil, £10 for filters, and a few minutes of getting greasy by doing it yourself, I think the DIY has to win out.

    BTW I’m going to trawl the rest of your blog soon, I just arrived on a link from Monevator. Cheers!

  23. 97

    CH says

    In my line of work, 90+% of the people I speak with each day are millionaires. They typically drive nice cars, but very few of them purchase new cars every 1-2 years (I don’t know any who lease). I see a lot of them driving nice cars (occasionally I’ll see someone roll up in a ’80s honda with the muffler hanging on with coat hanger, who is a multi-millionaire, but that is the exception), and they are almost always paid for (if not, they could all be paid off in a heartbeat). What many people don’t realize is that these people have not always lived the lifestyles they are currently living.

    The millionaire next door was a great book, but what has made an even better impact on me to is to see the it in real life. I once helped someone send money to a dealership to pay for a new car. I knew that the dealer sold Audi’s, so I asked if he was getting a new Audi. His response was awesome ‘I wish I could afford an Audi!’. Many people who are actually driving these cars are limiting themselves from being able to keep up their same lifestyle down the road, and meanwhile the guy who could pay cash for 50+ Audi’s doesn’t feel like he can afford one.

    • 98

      says

      @Macs: Welcome aboard! I’ll have to thank my friend the Investor (again) for sending you here. Monevator fans (of which I am one of the biggest!) tend to be among my “stickiest” readers, so I hope that trend continues with you, Macs! :-)
      @CH: Very interesting! Can I ask what line of work you are in, CH? If I was a multi-millionaire, I would probably would buy a luxury car. Great insight on the fact that many folk driving these cars today are going to be unable to maintain that lifestyle down the road. I’m curious if they will be able to handle driving a more modest car down the road after years of driving a luxury car…

      • 99

        CH says

        @Len – can’t really say much more than I work with people and their money/investments, and all my clients are millionaires. Most of them do drive luxury cars, but we’re talking Lexus, BMW, Cadillac, etc., not Bentley, Rolls, etc.

        • 100

          says

          @CH: I really don’t find it surprising that most of your millionaire clients drive the mid-level premiums like Beemers, as opposed to Bentley’s. If I was a millionaire, I’d “settle” for the BMW (or similar lower-priced luxury marque) too. As a millionaire, I would ask myself the same question I ask when I choose between a Civic and a BMW as a “thousandaire:” for the extra $50,000 or $100,000+ I’d pay for a Rolls or Maybach, what am I really getting? Whatever it is, from a utility perspective, I can’t believe it would be worth the price premium.

          • 101

            L says

            What counts as a millionaire, for you? Investable assets? Net worth (including home equity)?

            What about if most of a person’s wealth is in non-accessible tax-advantaged retirement savings?

            Just curious. I keep tabs on our personal balance sheet, but I’d have a hard time self-identifying as a millionaire if that million was composed of retirement savings and home equity.

          • 102

            Len Penzo says

            Hard to say, L, but for me it’s not so cut and dried as my net worth. I definitely wouldn’t include the money in my 401(k). I’d base it more on annual income: Without thinking about this too deeply right now, I’s say I would consider myself a millionaire if I could pull in $500,000 per year.

      • 103

        says

        @CH You just reminded me that there was a brand new Maserati GranTurismo parked close to my house today. I guess the people with the premium vehicles above Mercedes and BMW tend to have many other cars as well. I know of this Maserati owner and hear that he has at least 5 others. I’ve also read that the average Bentley owner has 6 or 7 other cars.

      • 104

        CH says

        For clarification – I’m in the Midwest, so people are a bit different with how they spend than some other places. However, I never said that there is anything wrong with buying expensive cars, I think it all just comes down to what people want to spend their money on. What is worth noting though is something that has been mentioned in other comments, that there is a difference between luxury vehicles and ‘ultra-luxury’ vehicles. BMW, Benz, etc. are not even in the same league as Maserati, and really shouldn’t even be compared IMO.

        Bentley says that the average owner of a Bentley has a net worth of $30M. Should the person worth $1.5M buy one? That’s their call. There is a big difference between the person who has worked hard for average pay and saved a million bucks and the person who earns that or more in a year.

        I guess all I’m really trying to point out is that a million bucks isn’t as much money as it once was (still a lot of money…but less so), and that just because someone accumulates $1M+, they can’t automatically afford anything in the world.

  24. 105

    says

    Great article! I generally agree with your views on this. However, I look at things a little differently. I basically consider every car under $70,000 to be non-luxury. I don’t believe there is any such thing as a prestigious Infiniti. The fact is that when you see an Audi R8, Aston Martin or other vehicle like that, they usually say quite a bit about the owner’s net worth. This $70,000 line simplifies things for me. People with a weak net worth have trouble buying cars over $70,000. In fact, moving my line up to $100,000 might not be a bad idea either.

    • 106

      says

      Hey, Jon, that is an interesting observation that makes a lot of sense. My ex-neighbors with the his and her BMWs probably would never have qualified for his and hers Maybachs – let alone even one. Maybe I need to create a new category of auto – like pseudo-luxury, sub-luxury, or poor-man’s luxury car.

      • 107

        hannah says

        I’m confused. Is this an old article that was reposted? I thought you said a few months ago that you bought a new car of some sort?

        • 108

          Len Penzo says

          Yes, Hannah, as I stated at the bottom of the article this is a repost from several years ago.

          And, your memory is spot on … after 17 years of driving my 1997 Civic, I finally broke down and bought a new car — but I still have the old car (which I am letting my teenage son drive), and the Honeybee is still driving our 2001 Odyssey. (By the way, 15 years from now I hope to still be driving my newest car (2013 Honda Accord) too.)

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