Thread: No Lambo for Get-Rich-Slow Folks?

Originally Posted by PEERless

I'd slit throats to have one or two, but I.....

A little extreme?

It not just slowlane millionaires that drive old cars. Buffett and that guy that created IKEA are both know for driving old cars.

I guess it depends on what is important for you. Both those guys would probably never be able to spend all their money no matter how hard they tried, they don't get the cars because they wouldn't enjoy them.

On slitting throats:
I assure you, butchers are slow-lane... unless you're selling sturgeon caviar maybe.

Originally Posted by PEERless

At what point are you so rich that you should (not can) buy a six-figure car?

You shouldn't do anything that you don't want to do. Some people have a *thing* for cars, some have it for wine or car audio equipment, others have it for watches. Im sure Buffet has a practical view of autos which is why an old Crown Vic works.

Originally Posted by PEERless

We all know that slow-lane millionaires don't drive Lambos, but should fast-laners?

You should spend a portion of your money on the things you enjoy. That might be a car, it might be a vacation, it might be an adventurous journey to Peru for 2 months, it might be a big house. It all depends on the person and what gets their adrenaline running.

Originally Posted by PEERless

It seems like a measure of frugality will protect our wealth when all our wells have dried up. Aren't there better places to use that capital?

Absolutely. The MSRP on my car is $329,000 and obviously those funds aren't in other investments. However, I can afford the auto because I have a substantial monthly income and investments; furthermore, I was frugal (and still am in much respect) with all my income and investments in my income acceleration years.

Originally Posted by PEERless

But I'm genuinely interested in discovering the threshold at which I should say, "There's no better way to use this money."

In my opinion, if it takes longer than 2 months of your income to pay for a car, you can't afford it ... if you can't pay cash for a car, 20 times over, you can't afford it. This (in my opinion I stress) translates into a fact that 99% of society can't afford their cars - they are shackles to living FREE.

The oxymoron of it all is this: People buy luxurious cars to appear rich yet it has the opposite effect -- it puts them in debt and erodes their freedom as they are compelled to work harder to pay for the image.

Conversely, the guy with the website/business profiting $600K/MONTH, semi-passive, do you think he can buy a $250K car and not bat an eyelash? Its like buying a gallon of milk down at the grocery store.

Better uses of the money? Sure, more investments. However, whats the point of trying to harness the Fastlane? "Finishing rich" like David Bach wants you to do? Its to enjoy life with the *things* that you enjoy now, not when you're dead .... those things can be anything, from toys and doodads to home-schooling your children.

My passions are autos, computers, and writing.

Rep Speed to PhxMJ for actually taking my question seriously. I agree 100% with everything you said. I bought my '93 SAAB 900 cash (not difficult), and I'll drive it until it explodes. That's not to say I don't want a $329,000 car, but I'm not exactly pulling in $600,000/month.

I like the 2-month/20x formula for buying a car. There certainly are some silly people imprisoned to some silly monthly payments.

I see the point that at some stage, one must USE some of the wonderful money one has earned. Slow-laners see that as retirement age. Maybe we could all benefit from "retiring" a little more often.

I second MJ's thoughts.
I could be the richest person on earth
and still not want a Lambo.
It wouldn't give me any pleasure,
just the opposite.
(I dislike people looking at me,
I'd rather fly way, way under the radar).

But I'd happily plunk a lot of cash into a vacation
(though I can't think of any six figure vacations that interest me).

And one of the perks of doing well financially
is that there are no "should's" about how you spend your excess cash.
I'm not wealthy by this forum's definition
(our net worth is only about a million)
but we do have more passive income than our needs require.
It is nobody's business how we spend the extra.

Originally Posted by PhxMJ

In my opinion, if it takes longer than 2 months of your income to pay for a car, you can't afford it ... if you can't pay cash for a car, 20 times over, you can't afford it. This (in my opinion I stress) translates into a fact that 99% of society can't afford their cars - they are shackles to living FREE.

Nice post. This quoted section is interesting. It's very true that a lot of people drive more expensive cars than they need to be. However, I'm not sure if the math of being able to afford to pay cash for a car 20 times over as a measure of affordability is realistic in the least. By that standard I could not even afford a car like a toyota or a honda (something under 25K) unless I had half a million dollars liquid in the bank.

Now, you might have been talking specifically about luxury "showy" cars like a lambo, but that's not what you said so I'm taking your quote about affordability literally. Let's face it, in this country unless you live in a city with very good public transportation, you need a car. And if everyone was buying $2000 beaters to drive around in, traffic would come to a stop every day because of all the mechanical breakdowns in the middle of the highway in rush hour. Not to mention the fact that they would be buying them every year or two anyway which isn't all that much cheaper than buying a more expensive car and driving it for 5-10 years. (Which I admit most people don't do that either.)

In the end I don't really disagree with what you are saying, just pointing out that I'm not sure the specifics are realistic. One last thing before I get called out... for the record, we drive a 2002 Jeep Grand Cherokee and a 2003 Ford Taurus, neither of which have a car payment attached. However, by your measurements we can't afford either because we couldn't have paid cash 20 times over for the Taurus at the time we purchased it, even though it was only $11,000.

PieThief-

I think MJ's point is that if you make $24,000 a year ($2K/mo), you can allocate $4k to buy a car. $48K a year ($4K/mo) would allow an $8K car.

Until 2000, ALL of my cars (except 1) cost me $2500 or less to buy. I used them for business purposes. The "exception" was a classic Mercedes Benz I bought for $3500.

Let me go on the record here saying that I am one of those people who absolutely LOVES cars. It's not rational. It just is. I grew up in Detroit, my grandpop worked for Ford, and it's in my blood.

Since 2000, I've bought 3 newish cars, all over $15K.

First was a Mustang convertible. $16K. Bought it with bonus income from my biz (grossed over $500K the year before).

Next was an Excursion for $22.5K. This was completely expensed as a business asset that year, due to its weight, and exclusive use for business.

Last year we bought an '06 Mustang convertible for $20.5K. But ONLY after we figured out how to sell other things we had already to pay for it.

My point?

I've done OK driving around in used cars. And paying not so much for them.

I get them serviced regularly, and do the big repairs when needed (which can all be partly or completely expensed, if I'm using the car for my business).

If you and your wife make $60K a year, that's $10K in two months.

I could get an awfully nice used car for that. In the past, I would have gotten at least four cars for that kind of money.

-Russ H.

Rep speed to MJ (like he needs it! )-- your other comments are spot on with what I would have written.

Originally Posted by PieThief

Nice post. This quoted section is interesting. It's very true that a lot of people drive more expensive cars than they need to be. However, I'm not sure if the math of being able to afford to pay cash for a car 20 times over as a measure of affordability is realistic in the least. By that standard I could not even afford a car like a toyota or a honda (something under 25K) unless I had half a million dollars liquid in the bank.

Now, you might have been talking specifically about luxury "showy" cars like a lambo, but that's not what you said so I'm taking your quote about affordability literally. Let's face it, in this country unless you live in a city with very good public transportation, you need a car. And if everyone was buying $2000 beaters to drive around in, traffic would come to a stop every day because of all the mechanical breakdowns in the middle of the highway in rush hour. Not to mention the fact that they would be buying them every year or two anyway which isn't all that much cheaper than buying a more expensive car and driving it for 5-10 years. (Which I admit most people don't do that either.)

In the end I don't really disagree with what you are saying, just pointing out that I'm not sure the specifics are realistic. One last thing before I get called out... for the record, we drive a 2002 Jeep Grand Cherokee and a 2003 Ford Taurus, neither of which have a car payment attached. However, by your measurements we can't afford either because we couldn't have paid cash 20 times over for the Taurus at the time we purchased it, even though it was only $11,000.

No need for a "calling out" as I agree with you. My post lacked specifics. I was referring more to the purchase of an auto as a toy/doodad vs necessity. I would apply those rules to the auto purchase made for fun vs need.

With respect to that however, most people opt for the $60K Escalade versus the 2 year old Honda for $15K. In that price range, it is a luxury, not a need so I would apply my rules. I wouldn't apply my rules to autos bought out of need unless they scale into luxury ranges. Ugh ... I'm writing a like a backed-up toilet today. I give up.

Cars are just not my thing. But like someone already mentioned...we all have our thing.

I want a beachfront vacation home. Beyond that, I love to travel. I'd also appreciate a small yacht very much. It would be awesome to load up the boat with a few good friends and take a run to the Bahamas for a few days.

The ultimate for me would be to own a fractional share in a private jet....such as with NetJets.

As far as cars go, I wouldn't want much more than a nice BMW...clean, sporty, dependable.

Yea, we all have our things.

Originally Posted by MJPhx

Ugh ... I'm writing a like a backed-up toilet today. I give up.

Quote of the day!

(writer's tip: if you're writing is like a backed up toilet, Don't give up, MJ-- clean out whatever is clogging up the works! )

-Russ H.

I absolutely think we should spend our money on our passions!

Originally Posted by PieThief

...And if everyone was buying $2000 beaters to drive around in, traffic would come to a stop every day because of all the mechanical breakdowns in the middle of the highway in rush hour. Not to mention the fact that they would be buying them every year or two anyway which isn't all that much cheaper than buying a more expensive car and driving it for 5-10 years. (Which I admit most people don't do that either.)...However, by your measurements we can't afford either because we couldn't have paid cash 20 times over for the Taurus at the time we purchased it, even though it was only $11,000.

I drive a $2000 car (not calling it a beater). I have for four years. Before that, someone drove it for 9 years. I have yet to break down on the freeway. A LOT of us love cars and the American freedom they symbolize. Some of us love them so much that we are willing to mortgage our lives to own a depreciating machine. Tsk! We should all take a moment to assess the true psychological REASONS for a purchase which requires a loan.

Pretty sure MJ's "20-Times-Over" method of calculating automobile-affordability is a bit exaggerated, but the point he was making is that a "mid-range" $30,000 car is not affordable on the median $26,000 salary (a 2006 stat).

Originally Posted by PhxMJ

You shouldn't do anything that you don't want to do. Some people have a *thing* for cars, some have it for wine or car audio equipment, others have it for watches. Im sure Buffet has a practical view of autos which is why an old Crown Vic works.



You should spend a portion of your money on the things you enjoy. That might be a car, it might be a vacation, it might be an adventurous journey to Peru for 2 months, it might be a big house. It all depends on the person and what gets their adrenaline running.



Absolutely. The MSRP on my car is $329,000 and obviously those funds aren't in other investments. However, I can afford the auto because I have a substantial monthly income and investments; furthermore, I was frugal (and still am in much respect) with all my income and investments in my income acceleration years.


In my opinion, if it takes longer than 2 months of your income to pay for a car, you can't afford it ... if you can't pay cash for a car, 20 times over, you can't afford it. This (in my opinion I stress) translates into a fact that 99% of society can't afford their cars - they are shackles to living FREE.

The oxymoron of it all is this: People buy luxurious cars to appear rich yet it has the opposite effect -- it puts them in debt and erodes their freedom as they are compelled to work harder to pay for the image.

Conversely, the guy with the website/business profiting $600K/MONTH, semi-passive, do you think he can buy a $250K car and not bat an eyelash? Its like buying a gallon of milk down at the grocery store.

Better uses of the money? Sure, more investments. However, whats the point of trying to harness the Fastlane? "Finishing rich" like David Bach wants you to do? Its to enjoy life with the *things* that you enjoy now, not when you're dead .... those things can be anything, from toys and doodads to home-schooling your children.

My passions are autos, computers, and writing.

MJ, I couldn't agree with you more on this one. Try explaining it to your friends who think the way to own these cars is to be a lawyer or some executive that makes 180K/yr. No matter how hard I try it seems like they just don't listen and it's not even worth the effort.

MP

Originally Posted by LamboMP

180K/yr

Yeah, you can't own a car worth 3 years' gross salary. Prolly shouldn't own ANYTHING other than investments worth 3 years of salary...

I'm 100% against having a car payment. I feel like if I can't pay cash for it, and have reasonable funds left over for other things -- I can't afford it. In the past I've had the experience of being a dumb kid with a new high paying job, and running out and buying a new BMW -- And boy was that a mistake. A mistake like that can take 3-4 years to get out of, and put you way behind in getting out of the rat race. Save the car purchases for when you've got so much money, you don't know what to spend it on -- IMHO

Cheers,

- Hakrjak

p.s.
I drive a 7 yr old truck with 117,000 miles on it -- and it's still running great!

The oxymoron of it all is this: People buy luxurious cars to appear rich yet it has the opposite effect -- it puts them in debt and erodes their freedom as they are compelled to work harder to pay for the image.

This is sooo true.

Originally Posted by PhxMJ

You should spend a portion of your money on the things you enjoy. That might be a car, it might be a vacation, it might be an adventurous journey to Peru for 2 months, it might be a big house. It all depends on the person and what gets their adrenaline running.

That's exactly right. I enjoy the challenge of making money and that's primarily where I spend my money. The toys I like and buy are as much an investment as a toy. My avatar (which I wish I owned) has doubled in value in the last 10 years.

The 'conventional' wisdom is that you should not buy a car that is more than a year of your salary (if you make $24K then your max car value should be $12K). Of course, this implies having a car payment.

I read it somewhere (the lambos forum?)... that you can afford the car payment doesn't mean you can afford the car.