A 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.)