Thursday, May 30, 2013

Money Mindset-Owning a Nice Car

Mercury Capri Convertible

Growing up I was lucky enough to have a car that was considered mine, it started with a 1997 Red Mercury Capri convertible, which I think was my Dad buying a convertible during the summer and then realizing we lived in the snow filled winter wonderland known as Wisconsin.  I don't think I really had to pay for anything on that car, if I did it was minimal, insurance, oil change, gas(Yes I remember .99/gallon), nothing too much.

Mercury Tracer

I then moved on to what many people growing up know as my car.  A 1997 Mercury Tracer, Purple of course.  Many nicknames were given, "The Traca' You Can't Replace", "The Tracer You Can't Eraser", "The Purple Barney Car".  All great nicknames for a great car.  I think the car was a couple years old when my parents bought it, some of the upgrades were.... haha who I am I kidding everything was standard, nothing was power, cruise control, that would be my foot hovering over the gas pedal at the same rate, CD player, haha a radio was the only thing bumping in my car.(I did later buy a CD player when I worked at Circuit City).  During high school and college, my parents had me paying the car payment the best I could, about $160 month until I basically couldn't afford it anymore and my parents paid off the loan.

What does this have to do with owning a nice car?  Well I didn't have a new car or expensive, I consider myself lucky for what I had, but nothing brand new or high end like a Mercedes Benz or BMW.  During college summers I lived in the Chicago suburbs and had the pleasure of working at a golf course that costs from what I remember around 80k to join.  So pretty much every car that rolled in there was a 50K car or more.  Rarely did I see the typical American Ford Taurus unless it was in the caddie parking lot.  I associated having money with having a nice car.  Which I think was one of the reasons I purchased my Mercedes Benz.  Now I bought it below Kelly Blue book value, but I felt like the richest man in the world.  My car payment wasn't ridiculous, nothing that I couldn't afford(asterisk )

I shortly realized buying a car with a payment was not smart.  I was paying about $300 month, not including insurance, gas, and maintenance which gets a little higher with a foreign car.  After moving from Florida(need a car), to Chicago(don't need a car).  I was able to sell my car after listing it on Craigslist, I took a hit out of pocket, I think I had to pay about $1200, possibly less.  This might have been the greatest financial decision I have made in my life.

Now when I see someone in my neighborhood driving an Escalade or new BMW, I think they are morons.  Why would you spend so much money on a car, is it to look good, feel good, these are items that are not going up in value?  That's a lot of money.  So let's say you make really good money and pull in 100K, a new Escalade costs about 60K, that still makes no sense to me, unless you are paying cash for this purchase I have to say this is a bad decision.  That's 60% of your salary.  I think knowone should have a car payment and the fair amount for your salary to car ratio should be right around 10%.  So make 200K you can drive a 20K car, unless it's cash then i think that bumps to 20%, so make make 200K a year and you can drive a used Escalade all paid for.

My Money Mindset when I am in the suburbs or nicer area is to see that same BMW and think that they are doing very well for themselves.  Owning a nice car seems to tell me that you have money.  This could be keeping up with the Jones' which is also something that can bring you down in the debt spiral of course.  But I think it's totally different, the guy driving the BMW is a guy doing well making good cash, the guy listening to Jay-Z driving the 60K Lexus is a moron to me.

Do you have a nice car with a payment or a lease?  Do you own a 1993 Toyota Corolla with rust on the side?  Do you ride your bike to work?  Take the bus, train, carpool?  How do you save money with your own transportation?


  1. Same boat here man. I bought a brand new 05' Mazda6 and had near a $300 a month car payment. Was it a fun car? Sure. Was it worth the payment? Nope.

    Now - I have a 99 Lumina with 180K on it. Not turning any heads and I sweat my butt off in the summer with no AC, but not having a car payment is totally worth it. Plus, there is something satisfying about doing maintenance on it.

    1. 99 Lumina sounds like you are going the extra mile, love it. I feel like owning a car without a payment is a badge of honor.

  2. We have two nice cars (a 2011 Wrangler and a 2013 Camaro 2SS). We took loans out on them, but only because the interest rates were very low (0.9% and 1.9%).

    We do like having nice cars, but that is because we are car people. We enjoy driving for fun. These are our splurge!

    1. So my question would be does it fall into my theoritical 10% of your salary for taking a loan? I do agree that there is some things that you should splurge on some things(whether it be cars, vacations, sports), but I do not believe it should be a loan to splurge on that item.

      Thanks for reading, I'll make sure to check out your blog today.