My uncle, who is the master of finding deals on vehicles and somehow actually making money from selling used cars even after he drives them for a while, sent me an article titled Opinion: The road to riches is this simple: Drive a junky car by Jared Dillian. Obviously, this article resonated with both of us, but I suspect that many wouldn’t even begin to read it simply because of the title.
I keep referencing the Money Dials article that I wrote a couple of weeks ago because I’ve been trying to think differently about money and how people decide to use their resources. If you haven’t read it yet, here’s a brief explanation: Money Dials is a concept that I learned from listening to Ramit Sethi in which you identify what you love spending money on and turn up the dial in spending in that area while cutting mercilessly in the areas that you don’t love spending money on.
The Problem With Expensive Cars
Having a nice, flashy car is something that many people like and can end up spending a ton of money on. For some people it’s their “Money Dial”. And there’s nothing wrong at all with spending your money on your car, if that’s what you like. The problem that I see is that those who spend a lot of money on having a nice car, or upgrading their car frequently, don’t often cut back their spending in other areas. Having a nice car is too often just another expense in maintaining an inflated lifestyle.
While trying to keep in mind that there are some people who prefer spending their money on their car over going out to eat or having a nice house or traveling, etc., the concept of spending extravagantly on the thing that you love (your car, in this instance) requires cutting mercilessly in other areas of your life.
My Thoughts On Vehicles
I’ve written before about the truck that I drive and the reasons why I won’t buy a vehicle that (I think) I’d love to have. The way that I see it is that 5 out of 7 days per week (71% of the time) my truck is on the road doing what it was manufactured to do roughly only 8.33% of the time. Most days, it’s even less than that. That means that it sits somewhere, not doing its job, almost 92% of the day. On the weekends, it usually sits not doing anything for a larger percentage of the day than that.
Think of that in terms of your car payment, if you have one. If you drive 2 hours or less most days like me, then 92% of your vehicle payment is going towards your car sitting somewhere not doing anything. Now consider the other expenses that you have on top of that including insurance, gas, maintenance and repairs, etc. That’s a lot of money to spend for the convenience of having an expensive vehicle ready for you at any time when one that’s not as nice would do the exact same thing, just in a less fashionable way.
If you need a car for business, then it’s likely that your employer pays for it, your employer provides a subsidy, or you’re self-employed and can receive significant tax advantages. If not, then that doesn’t necessarily mean that you need an expensive, new car to get the job done. I’ve heard the argument that you need a nice car to impress prospects and clients. My response to that, as harsh as it may seem, is that if someone doesn’t want to work with me because the vehicle I drive isn’t nice enough for them, then I probably don’t want to work with them either.
I see driving an older, used vehicle as being an indicator that I’m good at my job and that I’m someone who leads by example. Hopefully, when people think of me they see someone who won’t ask them to do anything I wouldn’t do myself and who they feel they can relate to because of the sacrifices that I make to achieve my goals.
I see keeping auto and home expenses as low as possible now while I’m young as a huge advantage since it allows me to maintain a high savings rate while being comfortable spending money on the things that I love. My goal is to set myself and my future family up for financial success by creating a solid foundation now through skewing my life more towards frugality, saving, and being responsible with my money while making sure that I enjoy myself plenty along the way.
