Rich or Drive Rich?Posted on July 29th, 2010
People often contact me asking for special dispensation because they drive expensive prestige makes of motor vehicles. They maintain that this is an effective way to show others [especially prospective customers/clients] as well as themselves that they are successful. And every one of them tells me that they either got a great lease deal or purchased their motor vehicle at cost, at dealer's cost. . . . But should you be bragging about the deal you cut if you're driving around in $80,000 worth of sheet metal?
Sorry but I don't give special dispensation! I do tell these people, however, that 86% of those who drive prestige makes of motor vehicles are not millionaires [having an investment portfolio of $1M or more-see Stop Acting Rich]. Also, I mention the median price paid for the most recent motor vehicle purchased by a millionaire was $31,367 [for decamillionaires-$41, 997]. It is understandable why so many people relate wealth with the price tag of a motor vehicle. In a study of more than 2,000 respondents, The Wall Street Journal found that 35% believed that in order to qualify as being rich a person must drive a car that costs $75,000 or more. If I applied this $75,000 threshold to the millionaires whom I surveyed, more than 90% would fail to qualify.
I also mention the case studies about two decamillionaires who drive anything but prestigious automobiles. One of these men invented the "dumpster"; he drives a Honda Civic. In sharp conrast, a trial lawyer who works in Boston commutes everyday in his Ford 250 super duty pick-up truck. Clients judge his success on his track record in the courtroom, not on the basis of his choice of motor vehicle!
The key here is simple: focus your energy on becoming an economic success not on acquiring the pseudo symbols of success.
Although not a millionaire, I am 42 years old and just a few dollars shy of meeting the criteria of a Super PAW.
I drive a 2004 Toyota Tacoma I purchased new for $23k. It is still a reliable vehicle after almost 9 years and 106,000 miles of service.
It is acceptable to buy a quality vehicle new. However, be prepared to own it for a minimum of 10 years.
This is a bit old, but interesting. I'm worth well into the eight figure range, but still drive a 80s Mercedes wagon I bought used in the late 80s and may have spent far more then it's worth over the years but I like it. My 'expensive' car is a 90s E34 BMW M5 wagon I had imported and highly modified some years back. I love that car. Me and my wife have 6 cars total (including a Ford F250). She drives a 5 year old Ford Taurus. We also have a Model A Ford and a MGA. All of our autos together are worth less then most new luxury automobiles. I also own several motorcyles, but again, nothing really expensive. I'm in the position to buy anything I'd like to have right now, within reason, but see no point in it when I'm happy with what I have. My kids thought I should have gotten them expensive cars, I never even bought them new ones. Now that they make their own money, they understand.On November 22nd, 2010, 9:23 PM, Isaac said:
Thank you for the research and the data i used to drive mercedes benz and waste money on cars now i drive a honda accord paid for! To become a millionaire you have to do what millionaires do im 27 and will be a millionaire by 30.On August 16th, 2010, 11:00 PM, Suzanne said:
I loved your book, I am all about facts and figures.
This also helps me feel better about our choice in vehicles, seems our families think we are silly for not driving nicer cars, we think it's great, and will continue to buy older vehicles with experience.
I am in the sales business self employed. Since I spend way too much time in my car I drive a used Benz wagon with 306,000 miles on it. Had 50k miles on it when I bought it 9 years ago. Doesnt owe me a dime and I get it serviced at a local garage by a guy in a jump suit who runs his own business and sends me a bill for service 3 weeks after its been in. Nice to get it serviced by a local businessman as opposed to the dealer where you pay for their high priced service attendants, oriental rugs on the floor and leather couches. Guess their price reflects their higher overhead. I even bought my wife a used volvo wagon from my mechanic. It really pays to support local business.Its amazing how common sense gets overlooked in a sea of luxury auto advertising. Keep up the great work Dr. Stanley.On August 9th, 2010, 9:15 PM, Chris A. said:
I also have struggled with the car issue, as I've been a car fanatic since I was 14, yet am a cheapskate.
My primary vehicle is a 99 Chevy Silverado that I paid $4500 for. But I also own a 99 Toyota Land Cruiser, 98 BMW 540i, and an 01 BMW X5. So yes, I own 2 luxury makes, but they are all paid for and were purchased with more than 100,000 miles on them. The 98 is worth $6000, and the 01 is worth $11,000. I own them because they are great drivers cars with all the latest safety features, yet still costs less than a Kia.
I also service and maintain these vehicles myself as much as possible to save money.
I probably need to sell the 98 BMW just to make my life easier. I keep rationalizing my 4 car ownership with the fact that my wife and I paid our house off last year at the age of 34. So we live debt free but are irrational about cars!
As a car fanatic, and a complete cheapskate - I have always struggled with this. If anyone is interested, here is one way to tackle the topic - my car vs house calculator
The general idea is that the annual cost of your car versus the annual cost of your house should be proportionate to the amount of time you spend in each.
Would appreciate your feedback...
I drive an 1998 toyota Sienna van with 4 hundred thousand kms on it . It owes me nothing and still runs great .On August 2nd, 2010, 10:49 AM, Kevin E Parker, Reynoldsburg Ohio said:
I applied the principals from your books, I purchase a two year old Acura TL low miles, great price. It is reliable, looks great and I did not spend 25, 30, or 40K for it. It is paid in full in 1.5 years, sorry Dave Ramsey, and rides very smooth when you don't have a monthly note.On August 1st, 2010, 5:55 PM, Shirley Barron said:
I am totally happy with my little Neon, now 9 years old with 130,000 miles. It gets 33-34 mpg. I owe nothing on it. I can't see the point of having huge car payments to drive a fancy piece of sheet metal either. I'm not quite a m'aire, & know that it won't happen, & that's OK. Really enjoying what you do have is important. A car is to get you from one place to another, not to show off. I'll spend my money on books, which I love, my church & other worthy causes, my family, & keeping my house (which I love) in good repair. Enjoyed your recent book. Thanks.On July 30th, 2010, 5:12 PM, David Pylyp said:
ahhhhh I so do want a new vehicle but alas the previously owned market is more suited to my pocket book. 35K for a previously owned is just budget fine for me.
Cheap is the new chic!
Living in Toronto
Your right on the cars. I can purchase with cash about any car I want. I have a plain Jane 4-runner. I can't see spending thousands of dollars on wheels. I think I paid $28,000 for it new. I waited and pick it up new when the next year models came out. So I got a new 4-runner that was discounted. When I purchase I always wait until the new models come out and find a new last year model that's sitting on the lot not sold. The dealership sure wants to get rid of it and will deal.On July 30th, 2010, 9:09 AM, Bill Anderson said:
As a Mortgage Broker in Canada I see the massive loans for auto's everyday. I have seen people making less than 70k a year with leases for over $950.00 per month.
Imagine if that money was invested in a good growth stock mutual fund over 30 years. You would become a Multiple Millionaire
All in the name of Vanity- Brutal
I bought a 1980 Mercedes Benz 300SD 3.0 liter turbodiesel back in January of 2009 for $1500 cash. It runs great, gets about 25 miles per gallon, and has not been expensive to maintain. I've driven it a bit more than 20,000 miles to date.
By chance, last year I met a retired engineer who worked for Mercedes Benz. He told me that Mercedes had a corporate philosophy at that time of designing their vehicles to last at least 2 million kilometers (1.25 million miles); no planned obsolescence.
Since my Mercedes has fewer than 300,000 miles at present, it should last me a good long time if I maintain it well.
Given the low total cost of ownership of my Mercedes, I respectfully request a one-time special dispensation to drive this classic luxury automobile.
I do like your statistics Dr. Stanley....
- I drive a '99 Toyota Tacoma pickup my dad willed to e at 14k miles...its has 162k now....I believe you affirmed recently that many Millonnaires drive Toyotas... coincidence for me!
- My truck is crucial for hauling appliances, brush to my farm in WV, tools and materials to do maintenance to my houses and apartments.
- Readers Digest had a report a long time ago that if you hold onto their vehicle for 10 or more years rather than say 3-4 years, it could mean $400k over 40 years...
- Recommended Book: Gene Simmons' "Sex, Money and Kiss" (2003)...once you get by the title, it is a well written book. I find Gene is an excellent spokesman for how to acquire wealth - and am on my 3rd read.
Keep up your research Thomas...the buzz nowadays is cheap is chic!
"the median price paid for the most recent motor vehicle purchased by a millionaire was $31,367"
I put this one in my master note file. If the median is $31k for M'aires then I need to look for cars that are much less expensive than what was I was previously looking at!
Thanks for the solid statistic. Can't argue with this one.
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